The Lyoness shopping community has caused a lot of negative headlines in the past – see press –. Participants assert, that they received much less as promised in return for making a down payment for vouchers. Many of those affected turned to BREITENEDER Rechtsanwalt GmbH (short BREITENEDER). By intervention of BREITENEDER, hundreds of affected individuals from various countries have already received full or significant compensation.
Background: the company Lyoness exists since 2002 and operates a shopping community, which distributes discounts amongst members. The system is similar to a multi-level marketing operation. Participants are however not only businesses but mostly consumers. This type of marketing relies on a domino effect. In addition there is a possibility to “invest” directly in order to purportedly participate in the turnover of certain markets. Due to the various payment-options into the pyramid-like shaped system, a large number of participants suffered financial disadvantages. This has lead repeatedly to complaints in the past. BREITENEDER was the first law firm in Austria, which reached a solution for a larger number of affected individuals.
The most important questions and answers concerning the current state of proceedings:
What is the state of proceedings in the Lyoness criminal procedure?
It was reported in the media, that a criminal complaint was filed against Hubert Freidl on the grounds of violation of capital market laws. Recently an expansion of the investigation was reported. The public procecutor is now examining whether the new instruments offered by Lyoness named "Rapid", "LEDV", "AT CC", "PL CC" und "S-E1CC" are investments subject to the obligation to publish a prospectus according to capital market laws. If this is the case, then, due to the lack of such a prospectus, there would be a possibility of withdrawal, which would lead to the repayment plus interest of the amounts invested to consumers.
A procedure on the allegation of fraud and Ponzi scheme was dismissed.
What can affected individuals do in connection with the criminal procedure?
Affected people can join the criminal proceedings as private claimant. This has two big advantages. First: At the end of the criminal procedure a compensation for the damages occurred can be granted to victims directly by the criminal court, without the need for victims to file a civil law suit, to regain the money invested. This saves costs. Second: The limitation period concerning claims for damages gets interrupted – this means that the limitation period is not running as long as the public prosecutor is investigating or the criminal court is concerned. Affected individuals can therefore await the outcome of the criminal procedure and have the possibility to later pursue their claims in civil court, in case they don’t get fully compensated by the criminal court. The claim has to sufficiently substantiated by the joinder in order to interrupt the limitation period.
Austrian consumer association VKI is currently litigating against Lyoness, on the subject of the transparency of general terms and conditions. What is the state of proceedings in the VKI-case?
The Austrian consumer information association VKI, represented by BREITENEDER, is successfully conducting a proceeding against Lyoness Europe AG. This procedure is about the general terms and conditions of Lyoness. The terms were written in such a complicated way, that a sensible contracting party could not understand the terms under which he has entered into the contract and which rights were granted under the contract.
The decision of the judiciary is issued in two of three instances – the prior proceedings has been successful: The Commercial Court of Vienna as well as the Higher Regional Court of Vienna found 61 clauses in the Lyoness general terms and conditions not transparent and therefore unlawful. Also the “order form business package” which constitutes the contractual basis of down payments for voucher was found unlawful.
Lyoness Europe AG has used its right to appeal to the Austrian Supreme Court. The VKI has submitted its reply to the appeal of Lyoness to the Austrian Supreme Court in April 2016. The decisions of the Commercial Court of Vienna as well as the Higher Regional Court of Vienna are therefore not final.
The decision from the Austrian Supreme Court is expected in 2017.
What effects may the proceeding of the VKI have for each affected individual?
In case the Austrian Supreme Court decides in favor of the decisions made in the first two instances, Lyoness cannot refer to the terms subject to the proceedings of the VKI or similar terms in lawsuits filed by affected individuals. Meaning the arguments made by Lyoness to not repay down payments for vouchers due to the terms and conditions will no longer be valid.
Have you made a Lyoness down payment for voucher and do you want it back?
Within the Lyoness business model it is possible to also make a down payment for vouchers. Such a down payment is also referred to by Lyoness as 7/3/3, business package, premium-membership, personal matrix and other.
A down payment for vouchers can furthermore be connected with a participation in a continental or national accounting system within the system. The idea behind this is that through these down payments members are given the opportunity to receive a repayment from turnovers which are generated by Lyoness in these specific territories. Such down payments must not exceed EUR 25.000,00.
In a model procedure supported by the VKI (represented by BREITENEDER), the plaintiff made a down payment of EUR 27.000,00 to the Lyoness system and during the period of her participation only received a repayment of EUR 78,00. A side note concerning the controversial transparency of the system: The question how this specific turnover was generated was not possible to clarify during the proceedings. The plaintiff has however regained the full down payment plus interest and procedural costs.
Is it possible to regain a Lyoness down payment for vouchers?
At the beginning of the disputes between Lyoness and their participants, this question could not be answered right away due to the questionable transparency of the system (inconsistent terms and conditions, absent capital market prospectus, lack of meaningful marketing material etc.). The lawyers of BREITENEDER have led proceedings, to answer this question for their clients – this approach has been a success: All former Lyoness participants represented by BREITENEDER in various court proceedings have regained their down payment for voucher made or have settled satisfactory. In some cases the proceedings are stayed. To date no proceeding has been lost. In many cases, it is sufficient that BREITENEDER addresses Lyoness with a formal request to pay back the deposited money to actually obtain a repayment.
If Lyoness refuses to an out-of-court compensation, BREITENEDER recommends affected consumers to file a lawsuit. According to consistent case-law, down payment for vouchers and payments for advertising campaign are to be paid back.
Is Lyoness considered a snowball scheme?
Numerous Austrian courts presumed in cases represented by BREITENEDER that Lyoness is a snowball system according to competition law. This is unlawful. As a consequence aggrieved consumers may claim that the contract is void and can therefore obtain a refund according to provisions governing unjustified enrichment.
Is Lyoness considered a pyramid scheme?
Only a criminal court may answer this question. The public prosecutor for corruption and white collar crime has dismissed the procedure on the allegation of Ponzi scheme in accordance with Art 168a Austrian Criminal Code in 2016.
Can advertising campaigns and premium ranking Europe be reclaimed?
According to consistent case-law of Austrian civil courts advertising campaigns are subject to the obligation to publish a prospectus. Since there is no prospectus existing the investments made by affected Lyoness participants are to be repaid, if a consumer withdraws from the contract.
Does the switch to Lyconet has any influence on the proceedings against Lyoness?
The fact that Lyoness has started a new trademark named Lyconet in 2014, did not have significant impact on legal proceedings brought by BREITENDER so far. We would be pleased to advise you concerning your individual case.
Which services are provided by BREITENEDER?
In connection with the losses, which resulted from the participation in the Lyoness system, we provide our clients the following services
out-of-court representation concerning the repayment of down payment for vouchers and similar
representation before Austrian courts
lodging a joinder in the criminal procedure against Hubert Freidl and others
Furthermore we are in contact with attorneys and consumer protection organization internationally and advise them in legal issues related to Lyoness.
If you are interested in being represented by BREITENEDER we kindly invite you to contact us. For this purpose we ask you to fill out the non-binding participation form. We will contact you subsequently to clarify the facts of your individual case.
Usually our intervention is covered by legal expenses insurance. In case you have such a legal expenses insurance we offer a coverage inquiry free of charge.
How much are the costs for a representation by BREITENEDER?
This question is justified. However it can only be answered properly for each individual case. Before taking legal action before court, you will receive a procedural cost estimation, based on the average duration of proceedings. However to get a feel of the financial risk of litigation, find a procedural cost estimation on the basis of an amount of dispute of EUR 10.000,00 here. If the affected individual seeking compensation has no legal expenses insurance, the court fees as well as the costs of the own representation has to be financed in advance. In case of a process success, the unsuccessful party has to bear the procedural costs of the successful party. In short: If the affected individual wins, he receives a reimbursement of procedural costs. In case the proceeding is lost, the procedural cost also of the defendant has to be borne. Besides the capital and the reimbursement of procedural costs the affected party is also entitled to claim interest in the amount of 4% p.a.