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It all started a few weeks ago when an old friend of mine (who I had not talked to for at least five to seven years) texted me out of the blue wanting to catch up.  When she meant catch up she wanted to talk on the phone, and there seemed to be a sense of urgency to it (she wanted to catch up in the next few days, not in the next week or two).  I thought it was nice that she wanted to talk.

I updated her on my life and she updated me on hers.  Then somehow the conversation switched to how she wanted to have an at-home business and how we can’t rely on the government and if you want to retire early, you have to work at it (little did she know she was talking a retire-early crusader like me).  Right when she said “and this segues into my next topic…” I went “a-ha…here we go, I knew it was too good to be true”

And So It Begins…

As I recovered from feeling annoyed that there was an ulterior motive to her wanting to “catch up”, she then talked about how she signed up for a new business and she wanted my opinion on whether I thought it was a good idea, and even if I wanted to join in on this new venture of hers.  There were a few videos to watch together (and I could not watch by myself) she had to do it via a phone call.  Being good natured (or perhaps a pushover) I went ahead and agreed to helping her out.

Customer Loyalty Program?

She was vague about the company until I directly questioned her, she just said it was a customer loyalty program that rewarded the customers for using their points card.  It is a company that originated in Europe and is fast becoming very popular here in North America.

I then watch the first two videos (note, 30 minutes of my time) and she offered me to watch the remaining two videos (which would take at least 30-45 more minutes of my time) when I had enough and was done with entertaining my curiosity.

The second video spent about 20 minutes talking about how the economy is so bad, and how people aren’t saving like they are used to for retirement, and how people have to take action.  The whole time I was getting slightly more irate and ambivalent simultaneously, and asked myself what this has to do with a customer loyalty card program?  Isn’t this fear mongering?

That’s when I called her out on it.

Isn’t that a Pyramid Scheme?

Isn’t Lyoness a pyramid scheme?  No, it is not, that is illegal in Canada, she answered.

I’m not sure how much she paid to get set up as an ambassador, but I told her she seems to be wasting her time (I felt a little like Kevin O’Leary, blunt and honest).  There is no “get rich quick” scheme, and people should invest their money regularly without trying to take advantage of contacts/ friendships built over the years.

She then concluded and asked me if I was interested in signing up for the free loyalty program.  The loyalty program is a cash back membership points card, and if you shop at certain companies like Petro Canada, Superstore, etc. you get 1-2% back on top of your ‘usual’ points Mastercard, and membership is free.

What is Lyoness, Anyway?

Lyoness is an online/ gift card/ loyalty points program that originated from Austria in 2003 (entering the Canadian market in 2010), and touts 4.5 million members worldwide, and 47,000 merchants.  It reminded me a little of Great Canadian Rebates, with the added schmooze.  There have been name changes, investigations, and class action lawsuits against Lyoness and many think it may be the beginning of the end of the company.  Life Cents Magazine has a nice article explaining Lyoness’ direct sales approach (better than what my friend could explain to me) which involves signing up friends/ acquaintances for the free points program (you get 0.5% commission of whatever they end up buying at the particular merchants, and if they refer friends you get commission on top of that too).

Perhaps I Was a Little Too Quick to Judge

Just like the Dragon Dens member (ahem, Kevin O’ Leary) I might have been bit quick to judge Lyoness and label it a pyramid scheme.  A few years ago, a truck driver pitched a business idea on Dragons Den and wanted them to sign up under him.  You can fast forward to 25:00 to 32:00 to view it.

I just found it annoying that my friend really just wanted to call me up because she wanted something, not simply to catch up on old times.

Readers, have you ever been involved or contacted through Lyoness or another similar business?  Is it a scam?

Article comments

DR. Wiese says:

Trust me Lyoness is a scam… I put in 15,000 and over 4 years received nothing.. I am also a business own and got other business owners involved, I now regret this in every way.

Sridhar says:

I visited a job fair to apply for jobs and explore opportunities. Someone at the entrance told me to visit some ABC stall, where he says a market research firm is recruiting. Then after the conversations the guy took my phone, email and told me that he would invite me to an orientation event. Although I had questions, he did not answer then and said that during the event I will get more details.
He also gave a vague and wrong impression that its about market research, opinions, surveys, etc. At the event there was a presentation by weird people in a weird fashion and finally I got to know it was Amway. Had I known this I would have avoided it altogether.
At the event, after the presentation some of this guy’s seniors tried to convince and pressurize me in to signing up, but I said I will think about it and did not budge to their pressure. They also used a bit of humiliation and pressure to say how I’m going to suffer in Canada and how I’m making mistakes in my life, blah…blah….oh God.
I got so frustrated that after I left I sent a text saying I dont want to be disturbed anymore. The matter ended there.
Generally these people try to be too vague and will not answer specific questions. When you see this pattern just avoid them. Moreover, typically they would be unusually nice, too flattering and make you feel as if you are the Warren Buffet or the Bill Gates kind of guy. Avoid them completely, its a waste of time and energy which can be better spent elsewhere.

phoebe says:

I had a similar situation – an old work contact very eager to have coffee with me. 20 minutes into the conversation she started talking about a great new skincare line she was representing – Arbonne (MLM but at least with a decent product I have heard). Suggested I may want to supplement my income by becoming a sales person too. No.

A close friend years ago went for a job interview, didn’t get the job, but shortly after one of the interviewers called her to say she had a lot of potential as a sales partner in ACN Video Phone Business (MLM promoted by Trump) – that made me so angry – talk about taking advantage of someone when they are vulnerable.

My final example was a pyramid investment scheme my friend got involved in, and then encouraged me to invest. No.

Robb Engen says:

I think these companies prefer to be called “direct sales” rather than MLM…so let’s call it a direct sales scam, shall we?

Seriously, the quickest way to spot a scam is by how much time the “seller” is willing to spend convincing (coercing?) you to sign up.

Comparing to Great Canadian Rebates is a stretch because GCR is about as passive a referral program as you can get. It’s all online and anonymous – you don’t see who signs up under your name. There’s no extra incentive for having more people sign up, and you don’t earn commission off of your friends-of-friends (i.e. pyramid).

Lyoness sounds like a complicated scam and a waste of time.

It drives me nuts that more and more people are being lured into working for these direct sales companies – like the world needs more vitamins, body wraps, essential oils, passion parties, or whatever.

Young says:

@RE- Thanks for clarification re: GCR. Haha I was recently invited to an essential oils ‘party’.

Kyle says:

I resent the fact you think the world has too many body wraps Mr. Engen! You can never have too many body wraps…