| Company type | Private |
|---|---|
| Industry | Shopping reward and loyalty program |
| Founded | 2017 |
| Headquarters | Graz, Austria |
Key people | Radovan Vitosevic (CEO), Marko Sedovnik (President of the Board), Dipl.-Ing. Herbert Paierl (CSB) |
| Owner | Hubert Freidl, Marko Sedovnik and Sharif Omar |
Number of employees | 600+ |
Lyoness International AG is a Swiss-based company that operates a shopping reward and loyalty program. Its core service connects consumers, retailers, and service providers by offering incentives and benefits through a structured cashback system. [1]
The company was originally established in 2003 in Switzerland as a multi-level marketing (MLM) organization. It developed a hybrid model combining loyalty rewards with member referrals and commission-based participation. [2]
Lyoness was founded in 2003 in Switzerland as a shopping community that offered a loyalty rewards system combining cashback incentives with member-based participation. [1]
Over time, the company introduced additional operational entities, brands and platforms aimed at streamlining services and expanding internationally. [2]
In 2023, Lyoness International AG and Lyoness Europe AG, which served as umbrella companies for the Lyoness business model, filed for insolvency. This development marked a significant shift in the organization’s structure, although the Lyoness name continues to be used in legal, financial, and structural contexts in several markets. [3] [4] [5]
Lyoness was founded in Switzerland in 2003 as a shopping community that offered a loyalty program combining cashback rewards with member-based participation. [6] Members could receive benefits from purchases made at participating partner merchants. The model also included referral-based incentives, where members could introduce others to the platform and potentially earn commissions tied to their network's activity. [2]
The company later expanded its services to include various marketing tools for partner businesses, aiming to increase consumer engagement and retention. This included features such as loyalty cards, promotional campaigns, and access to a global shopping community. Businesses participating in the program were typically charged fees based on the performance or volume of transactions generated through the platform. [7]
In 2004, the CEO of Lyoness, Hubert Freidl, was hired as the company's director. [8] Lyoness comprises at least seven corporations registered in Switzerland, [9] nine corporations registered in Austria [10] and approximately 42 additional national and regional corporations all around the globe. [11] The name "Lyoness" was derived from the Celtic mythological kingdom "Lyonesse". [12]
The continental organisations are subsidiaries of Lyoness International AG and are registered as stock corporations. These are: Lyoness Europe AG (founded in 2003), "Lyoness IMEA S.A." (2009), Lyoness North America Ltd., "Lyoness South America S.A.", "Lyoness Asia Ltd." (2011). [11]
The country offices are subsidiaries of the continental stock corporations and are registered as privately owned, limited-liability companies. [11]
According to Lyoness, every purchase made by its members at its partner companies benefits the Child and Family Foundation (a charity organisation) [13] [ failed verification ] and the Greenfinity Foundation (an organisation promoting sustainability). [14]
In 2012, Lyoness announced that it and its affiliated Greenfinity foundation would be the title sponsors of the Austrian Open golf tournament for three seasons, through to 2014. [15] [16] Lyoness also sponsored the ‘European Juniors League’, a European football competition for youth teams, [17] as well as Austrian club SK Rapid Wien. [18] Lyoness announced that it would pay 9 million euros over 5 soccer seasons but would not be the main sponsor of Rapid Wien. [19] [ failed verification ]
In March 2010, the Swiss magazine Beobachter published an article [20] with a big review and analyses of Lyoness. In early 2012, Kleine Zeitung published an article [21] suggesting that Lyoness operated an irrelevant shopping community. L'Hebdo , a Swiss magazine also criticed the company and its investment methods, not enough clear for general public. [22]
In February 2012, an article by Beobachter revealed that internal Lyoness communications offered members "bounties" of up to 45,000 CHF for providing "relevant information" about critics of the company. Furthermore, the article highlighted concerns about the Lyoness business model, suggesting it prioritizes recruitment over providing discounts. [23]
In 2012, the Austrian Der Standard [24] , and the Swiss Handelszeitung reviewed the Lyoness and mentioned it has failed in financial fullfillment according to EU and Swiss investments regulations. [25] [26] [27] The Wiener Zeitung reported in 2013 [27] about Lyoness regarding financial tensions between the brand and the Austrian government, having provided a detailed analyses on Lyoness management and functioning. [27] In 2023 Lyoness International AG and Lyoness Europe AG filed for insolvency, although their national subsidiaries remained operational. [28] [29] [30]
On November 30, 2011, Dragons’ Den Canada aired an episode featuring the pitch of the Lyoness ‘Premium Member’ Andy Nyakas from Brampton, Ontario, asking the ‘Dragons’ to jointly invest CDN$175,000 to acquire Lyoness ‘business packages’ through him. [31] None of the Dragons were willing to invest. Instead, they ridiculed him and his business idea, suggesting that it's 'distasteful', and 'a pyramid scheme’. Robert Herjavec also advised Nyakis, who borrowed against his house to acquire Lyoness positions, not to invest any more money in the Lyoness system. [31]
Another television show that has reported on Lyoness is the Austrian public television program ORF Report. This programme aired episodes under the names ‘Lyoness - The money machine’ (November 13, 2012), [32] 'Shopping Community Lyoness' (November27th, 2013) [33] and ‘The man behind Lyoness’ (April 24, 2013), [34] interviewing experts and former participants, which both say that Lyoness operates a pyramid scheme behind the façade of a ‘shopping community’. [35] [36] The latter episode also features hidden camera footage of Hubert Freidl telling his followers that spreading ‘Cashback Cards’ is irrelevant – ‘it is all about the positions, positions, positions, positions’. [36]
From a Lyoness income disclosure statement [37] can be derived that the average Lyoness member in the United States receives a gross annual commission of approximately $275, or $23 per month. The monthly median commission value of $0.38 indicates that the vast majority of the members receives a lower commission than the 23 dollar monthly average. [37]
Additionally, the document states that 46% of the Lyoness members makes $0 in commission and that the average annual expenditures, not taken into account when calculating the average commission, are $1,294. [37] Similar figures have been reported in 2013, [38] and in Canada. [39]
On the Internet, various websites and blogs from all over the world have focused critical attention on Lyoness, accusing the company of illegal business practices (mainly of running pyramid and Ponzi schemes) and questioning the alleged partnerships between Lyoness and several multinational corporations, as well as the validity and relevance of the certificates granted to the Lyoness shopping community. In April 2013, it was reported that former (Austrian) participants of Lyoness had organised themselves and founded an organisation and website called Plattform Lyoness. [36] [40] Not much later, an international equivalent was established under the name Lyoness Complaint Centre.[ citation needed ]
In the beginning of June 2013, it was reported that Lyoness filed legal complaints against the founders of Plattform Lyoness. [41] [42] The founders were forced to remove legal documents concerning Lyoness from their website. [41] Plattform Lyoness has reported that a preliminary injunction in a subsequent court case forced Plattform Lyoness to change its domain name from www.plattform-lyoness.at to www.lyoness-geschaedigte-plattform.at, as the court found that domain names linking to negative content about Lyoness should carry a distinctive term to indicate that the domain is not hosted by Lyoness itself. [43] Plattform Lyoness solved this by adding the term 'geschaedigte', which is the German word for 'victims'. Lyoness' other demands were not granted by the court.[ citation needed ]
In August 2015, two former employees were acquitted in Austria on charges of fraud and money laundering. [44]
