Experiences with Lyoness? Scam?

Factual Questions
61

No, you didn’t. I said:

“intertile, you say this is “no risk”. I find this difficult to believe. Put simply, what have you invested in this program, and what have you earned, in actual numerical figures?”

Hand-waving that as a retail business that it’s different is insufficient. Explain how much you have invested, and how much you have earned (dollars in hand, not potential money you might claim, by the way). Further, what will you need to accomplish (again, in numerical figures, not vague explanations, and including ALL requirements) to turn a profit, as I’m assuming you have not?

Also:

“What will you need to do to make an actual profit in terms of selling product rather than recruiting new people?”

You are claiming there is no product, people just need to “shop normally”. That seems odd (why do stores want to give a discount if not to encourage people to change their shopping habits?) but in any case, let’s talk numbers. Specifically what needs to happen for you to earn X dollars? How many shoppers do you have to recruit and how much do they need to spend to earn, say, $1000? How do you get that money? Are there other requirements? Again, let’s save the jargon – tell me like I’m a child here. I understand people you need to recruit, I understand dollars, I don’t understand binary accounting matrices or whatever the fuck. Use actual, real-world terms.

62

ok fluiddruid…specifics,

I as a retail partner, invested $3000 to be a premium member, and $780 in software and equipent to be able to scan cards. Here is where things get confusing and quite difficult to explain in a forum, but I will do my best.

First off there are 2 ways to become a member…1) for free by making a purchase at a retail store
2) by making a gift card deposit ($225-$3000)

In NY/Fl there are some stores that you can sign up at, but for the time being as the network expands most stores are online or done via gift cards. So lets say you buy in for $225. That $225 is placed in your own person accounting software. Basically giving you 3 $75 units. When each of these units matures they are worth $675. So a $225 deposit will eventually turn into $2025 + commisions.

Ok, as I mentioned there is no product to sell. In order for the $75 units to mature you effectively need an additional 70 units to be created. Units can be created by shopping or by Deposits. So if you were to bring in 5 people at $225 you would have 18 units created. If for example you were to get a free card in the future, then you could simply use the networks and creat you units through shopping. Then as all of you shop you continue create discounts in your loyalty accounts…as those accounts accumulate to $75 it continues to create units. In addition each $75 unit created will generate an additional $198 in commissions for the owner from the time of creation until maturity. It then re-books into the 2nd level accounting program and continues to earn another $594 in commissions, and so on and so forth.
I can’t give you specifics in rate of return, because every online store has a different rate. For example my store is 5%, but there is a beauty supply store giving 13%. Also, some people are power shoppers…they may spend thousands a month while others only a few hundreds…but lets say on average a household spend $1000, and the discount rate on average is 5%. Then every month and a half a unit would be created. So the more people that you bring in the better, because the more units are created.

Now, lets go back a second to my no risk claim. Lets say you buy in for $225. After 2 months you decide it isn’t for you and you want out…That $225 represents the discount portion of your shopping. So you can call Lyoness and shop your way out. Assume you are going to purchase a tv for $2000, and that store gives a 10% discount. You buy the TV for $1800, and use $200 of your $225, leaving you with a $25 balance to shop out.

So a direct answer to your question is if you are using the shopping network, and you upline and downline are using the network (downline has more impact then upline, because who ever is below you makes a direct impact, while above you may impact you or another of there branches) you could see moderate income within 6-8 months. If you do nothing but just shop in the system you will see savings, but it will take longer. If you sign up and do absolutely nothing, then absolutely nothing will happen.

Ok, so if you want to consider the $225 “risk”, I guess you could…but ultimately its still yours, and you can pull it out. Using our example of $1000 and 5% it would take about 4.5 months.

The value in this is that there is no attrition because people will always shop, and there is no product to invest in or sell.

63

If the members come out ahead, the shoppers come out ahead, the stores come out ahead, and Lyoness comes out ahead…who or where is the profit coming from?

64

So your net profit so far is a negative $3780?

65

I can answer this, even though I am highly skeptical about the overall integrity of this scheme. The profit is said to come from the discounts offered by participating stores; they come out ahead in the sense that they get new customers, but they have to offer discounts to participate. These discounts are paid to Lyoness, who then share the proceeds amongst the remaining stakeholders.

Those who question the legitimacy of the scheme believe that much of the profit is in fact coming from the investments made by people like intertile. If this is proven to be the case, then it is indeed a classic pyramid scheme.

66

This could make sense, but only if the stores were offering discounts so huge that they could be divided up a. to benefit the shopper and b. to benefit all the other stakeholders. In intertile’s example, that 5% discount his store is offering, it all appears to be offered to the participating shopper, so how can it contribute offer the $75 => $675 maturation of which he speaks? Maybe there are retailers offering discounts so freaking huge that their benefits can be split and divided between shoppers and members, but I seriously doubt it.

My emphases.

What we’ve got here is the explanation given within the context of Lyoness. I am sure that it’s internally logically consistent.

Despite this fancy explanation, it doesn’t actually make external sense.

Yes, it’s a complex-sounding system, but at the end of the day it should be able to answer a simple question: where does the money come from?

For the $75 ‘position’ to grow by 900%, how can shopping increase it, especially if the discounts offered by retailers to shoppers are passed on to those shoppers? There has to be extra money coming from somewhere.

My emphases in intertile’s explanation indicate that, absent some magic, the system relies on recruitment and the thousand-dollar amounts that he and other retailers and participants have invested.

I don’t think it’s either/or. I think they do a bit of everything which hides the pyramidal part. This is what’s clever, I think: they’ve got the internals so complicated that the fundamental ‘how the fuck could this possibly work?’ is obfuscated, and once you’ve bought into it you’re unlikely to ask that question again.

67

Hi All,

I’m a Lyoness Member and maybe I can shed some light and help answer any questions you may have. I realize that what I may attempt to do may go over my head…but I will certainly do my best.

To answer the last question…what does it cost?

You can become a member by either 1) making a down payment for future shopping for as little as $225 or to become a premium at $3000. 2) Making a purchase of $450 of gift cards through the Lyoness Store as one purchase will make you a member as well.

68

Jimm

The money simply comes from the Loyalty Partner (merchants). When Lyoness members shop at their stores…the merchants give the negotiated discount to Lyoness. Lyoness will then allocate the funds to the members in various benefits.

69

This is what the so called binary matrix looks like: http://4.bp.blogspot.com/_Pqrkbo25KlA/TP2J8QJ1WEI/AAAAAAAAAAM/ug5T67ff4zY/s1600/Matrix.jpg

Looks like a pyramid rotated 90[sup]o[/sup].

70

To Musicat: I’ve just started less than a month ago. My store isn’t 100% integrated yet. So, yes at the moment I have not made a profit. I never claimed you simply sign up and make money, it does take sometime.

To Czarcasm and JJim:

This isn’t 100% accurate, but for the sake of explanation…if 1 unit = $75 in discounts from multiple vendors over the period of say 45 days. I explained earlier that 70 more units needed to be created for it too mature. 35 above and 35 below(referring to the matrix). So that would mean that $5325 in total discounts were created in order for 1 $75 unit to mature to $675. From there also is paid the commissions, bonuses, volume bonuses, etc… There are 10 income streams associated with the program.

As for the matrix that Dog80 found, yes it looks like a pyramid side ways, except that those slots are not people. They represent accounting units. That’s what they mean by 35/35. From each unit 35 units need to be above and 35 need to be below for it to mature.
So, Customers get savings on everyday purchases, and the possibility to even generate income from there’s and others everyday purchases.

Shops get free advertising to a growing customer base.(Has been in Europe for 6 years and has grown to 26 countries and 2 million users)
So, just to be clear…lets say tomorrow I was going to purchase jeans. I would go online to Lyoness and log in. Follow the portal to Macy’s or Gap’s online store. Purchase my jeans as normal and pay for them as normal(so if gap is running a sale for using there card you still get that discount as well). Now I get the same jeans I would have normally purchased, and I get my 2% cash back as well as another 2-5% in loyalty cash that will accrue until I have accumulated $75. The more you use the system the more you benefit, and there is no attrition because people always need to buy things.

The network is growing monthly…in membership and in vendors. This month they added Safeway markets to there online stores. Safeway is a supermarket chain that operates in 5 states I believe. Currently there are approx 400-500 stores in the network…(most of which are online stores that ship to all 50 states)

71

I’m trying to figure out why a store that is popular and successful would negotiate such a deal with Lyoness-what’s in it for them? The discount must be horrendously huge if all those members are making the profits the company claims they are making. The only reason a store would make such a deal is if either:

  1. The discount just isn’t that large, or
  2. Only stores that aren’t making it on their own are trying this as a last-ditch effort to stay open.

I took a look at the Lyoness site to see what was available for me. The pull down list for states includes all 50, so I plugged in my zip code to see what was available..and got nothing. I next checked to see what was available in my state(Oregon), and got the same result. I next checked a neighboring state(Washington), and got nothing. I checked the state bordering us on the east(Idaho), and got nothing. My neighboring state to the south(California), nothing. Montana? Nothing. Wyoming? Nothing.

Here is a link to a world-wide map listing where all the stores are located-tell me if you see anything interesting to members in North and South America.

72

No matter how you rotate it, it’s still a pyramid.

I can see how you pay out, but I don’t see how you get any money in. How many new members does it take to break even after you pay that $3000? Please do the math and get back to us.

When do you anticipate crossing the break even line? How many members will you have to recruit to do so?

73

I just used Lyoness’ map and zoomed in on the United States, and it shows hundreds of cities throughout the country, which looks mighty damn impressive…until you read the legend in the NE corner of the map. None of those cities actually have any Lyoness-afilliated merchants in them.

74

2 million people across 26 countries isn’t impressive and doesn’t testify to the effectiveness of the program. If all those people were not spread across all those countries and instead lived in the US, that’s less than 1% of the population. I’m pretty sure most people would agree that at least that percent of people can be fools.

But anyway, I don’t see any way you can look at this and not call it a pyramid scheme. You invest $75. You wait for people that are affiliated with you (I’m not sure what above and below mean here.) to invest a bunch of money. You get paid out a small percent of the money those people invest.

You seem to be saying that the discount stores offer people participating in this scheme also counts towards your payoff. So then, as a customer of one of these stores do you not actually get the 5% or whatever discount? Instead the money is shipped by the retailer to Lyoness? And instead it fills in blocks of the pyramid? If so, all the discount is is another way to get people to put more money into the system than they’re getting out.

As with all of these things eventually, no one will buy any more “units”. There will be no more new stores signing up and paying thousands of dollars to get set up. There will be no more money coming in and so no one will be able to get money out.

You might insist that the discount part of it will keep things afloat. But if everybody’s buying stuff and getting 5% of their purchases put into the system, the most you’ll get back is 5% of what you purchase. And that’s assuming Lyoness isn’t taking anything for profit. And that retailers will continue to offer a discount based off a then discredited pyramid scheme.

75

A little too late to edit my reply, I think how I should have phrased things was more along this line:

What happens when the market for Lyoness is saturated? At that point, there are no new retailers buying the equipment and paying the start-up fee. Also, no individuals are buying units any more. What happens to the last people who invested? How do the discounts alone lead to units for everybody maturing?

76

Czarcasm, I’m not sure I understand what you mean. There are very few “brick and mortar” stores currently in the network. I believe Florida has a dozen or so, and there are another 5- 6 in NY and a few in PA. There are however approx 400 online stores like Gap, Old Navy, Banana Republic, Zuma, Itunes, Sport Authority, etc.

Musicat, its very difficult to give you a time frame on getting your money back. Simply because peoples shopping habits vary so greatly. A guess would be if you brought in say 5 people. As soon as they bring in 2 on average, my estimation is that you could be breaking even, and possibly even seeing a small profit. Let me just clarify…It wouldn’t happen instantaneously. It would take a couple of months of everyone using the system for it to work. The $225-$3000 is paid to Lyoness USA and is used to book units into your personal accounting system. It is NOT paid out to people that recruited you. Again, these are estimates…The most important thing is for everyone to use the system.

Also to answer the question of how money goes into the system to pay people out. As a retail store I have agreed to a 5% discount. So at the end of the month if I have sold $100000 in products to Lyoness members I will get an invoice from Lyoness for $5000.

77

Let us know when that happens, 'K?

78

Although I’d like to see some real numbers from a real store, let’s go with your hypothetical “$100,000” in Lyoness sales. Of that 5%,what percentage does Lyoness keep for itself? Out of what is left, how many members divvy up the sloppy seconds?

79

If you use Ebates, Macy’s is currently 6% cash back, normally 3%. Gap is 2%. Apple 1%, Sephora 8%, Khol’s 6%, Staples 2.5%. K-Mart, WalMart, Target, all businesses people use normally, and oodles of them. UPromise is similar. Costs nothing to join, no “startup” fees, you just get money back on your purchases. No worrying about what anyone else is doing. No getting stuck having to spend your “loyalty cash” at a Lyoness business. You get a check that you can spend any damn way you please.

80

Musicat: That will happen within the next 30 days, because even if there aren’t a lot of members in the area yet…I will be giving people cards free with every purchase.

Mithras: It will never reach 100% saturation…A good example is electronic toll collection at bridges and highways. I believe NY has had that since the 90’s, yet every day I see hundreds of cars waiting in line to pay there tolls. But, to answer your question the people getting involved in 3 years will still benefit from savings, but there upside will not be as great as someone who is getting involved now when there are so few involved.

Ultimately the benefits are only realized if people shop within the network. If I sign up 50 people tomorrow and no one ever uses the network, it does me and them absolutely no good.

So think of this for a second…I’m 37 years old and have been on my own since I was 20. That is 17 years of paying bills like food, clothes, gas, etc. If we use say $800/month (could be less for you, but I live in NYC) in average expenses for the past 17 years we come up with $163200 spent on everyday purchases. This is real money I spent and received varies goods or services for it. Now, assume that Lyoness was around 17 years ago and I spent this money within the system at the normal 5% discount rate that I referred to earlier. $163,200 x 2% = $3264 in cash that I would have received back, and $163,200 x 3% = $4896 in Loyalty funds. $4896 in loyalty funds would convert to 65 units of $75 each. Those 65 units would mature to $43,875 in cash deposited to my checking account. How long would it take? Does it matter, really? I spent the money regardless. If I came up to anyone on the forum and said, btw you’ve been spending money for the past 17 years…I want to give you $40,000 of it back, would you refuse it?

You are looking at like, you are making money of someone else’s purchases…ok, maybe I am, but they are gonna spend that money regardless, and they are also going to save money as well. Your not asking them to spend more, or even buy some new product they don’t need. Will it take time? YES, but time is the one thing we all have. No one claimed that you join Lyoness and quit your job. For the average person Lyoness will be a tremendous tool to save money and possibly earn a residual income. For some people it will be an opportunity to make a lot of money. Such is Capitalism.