Is Lyconet A Pyramid Scheme? – Lyoness MLM: Scam or Legit?

I’m guessing you’re reading this because you’re trying to figure out whether or not the Lyconet pyramid scheme allegations are true.

Is Lyconet a pyramid scheme or is it an opportunity that you could use to finally get ahead in this expensive world?

So let’s cut right to the chase…

Lyconet, formerly known as the Lyoness MLM, is technically not a pyramid scheme or scam…

But there are some very good reasons as to why people think that it is. To be honest, I have some serious concerns about Lyconet.

In fact, I strongly recommend not getting involved in this business opportunity.

And we will discuss all of it later in this Lyconet review article.

You were likely approached by a friend or family member, or possibly even a complete stranger, about the Lyconet company.

You were told that this could be an opportunity for you to build a huge business from the comfort of your home. Or perhaps you were told that this could be an opportunity for you to expand your customer base for your existing business.

Perhaps you’re intrigued, but also a bit sceptical.

After all, if it sounds too good to be true, it often is, right?

I want to commend you for doing your own due diligence and trying to find out the truth about Lyconet or Lyoness.

Starting a business, even a home based business, is a big life altering decision and is not something that you should go into lightly.

So I am going to attempt to give you a balanced perspective on this company.

Many of the Lyconet reviews that you will find do not do a very good job of explaining this company in a nuanced way.

They only give you one side.

Either they give credence to all the horror stories…

Or they paint a picture of sunshine and roses.

I want to point out the pros AND the cons so that you can be armed with as much information as possible. So whatever decision you decide to make on this, you will be able to move forward with confidence.

We’ll talk about what you would be doing as a Lyconet marketer, what role cryptocurrency plays, and why so many folks wrongly see this as a pyramid scheme.

What Is Lyconet vs Lyoness?

Lyconet is a multi level marketing company, also commonly referred to as network marketing. The company was founded in Austria back in 2003.

Lyoness is essentially a shopping rewards program. If you sign up as a member, you can use your Lyoness membership at thousands of retailers all over the world to get loyalty rewards and cash back on your purchases.

If you own a retail business, you can also sign up to accept Lyoness customers at your store.

The company has experienced massive growth since their inception. They currently have over 15 million shoppers in 6 continents. Over 80,000 merchants have partnered up with Lyoness all over the world in order to offer their customers Lyoness-powered rewards.

Some of the most well known Lyoness partners include:

• Alibaba
• Hotels.com
• travelWorld.com
• Rentalcars.com
• Essence Spa

What’s The Difference Between Lyoness and Lyconet?

It gets a bit confusing. 

Lyoness is the name of the shopping rewards program. 

Lyconet is the name attached to the network marketing side of the business. 

So if you chose to sign up as a shopper and simply participate in the rewards programs, you would only be associated with Lyoness.

But if you decided to start a home business by sharing the rewards program with others, you would be associated with Lyconet.

We are going to be focusing mainly on the business opportunity, so for most of this article we will be referring only to Lyconet.

How Old Is Lyconet?

As we discussed earlier, Lyoness was founded in 2003.

But the business opportunity was branded as Lyconet in 2014.

Who Owns Lyconet?

The main founder and CEO of Lyconet appears to be Hubert Freidl, although finding exactly who the current owner is has proven to be a bit difficult.

Lyconet Headquarters

The corporate structure of the Lyconet business is quite complex and convoluted. In total, they control at least 7 corporations in Switzerland, 9 in Austria, and at least 42 additional corporations all over the world.

It appears as though their main headquarters may be located in Buchs, Switzerland.

How Lyconet Works?

Network marketing is simply a different way of doing business.

Instead of going through traditional advertising and retail distribution channels, the Lyconet business uses independent sales reps to deliver their products into the marketplace.

The Lyconet career opportunity allows regular folks like you and me to start our own business by selling products to people in your network.

You can also build your own sales team…

And the members in your sales team can build their own teams.

You can earn commissions from sales made by all the people in your organisation down two generations deep.

This can really create leverage in your business especially when your team grows to the point where it starts growing itself.

It’s really not that different from any other traditional business.

The main difference is the way in which products are distributed into the economy.

Lyconet Products

This is where things get a bit weird…

Unlike other network marketing companies like Shaklee, Coway, or Primerica, the Lyconet MLM doesn’t actually produce or sell any real products of their own.

Essentially, the main Lyconet product is a membership to Lyconet Cashback World, aka the Lyoness shopping network.

When I first started doing the research for this Lyconet review, I was very intrigued and excited.

I mean, I really like the idea of building a network of shoppers that will earn me commissions every time they buy the goods and services that they would be buying anyway.

For example, if one of your shoppers goes grocery shopping, you could potentially earn a small commission from the grocery trip.

If they swung by McDonalds on their way home for a McDouble, you could potentially get a small commission from that sale too.

At least that was the original idea…

In reality, it doesn’t seem to work that way at all.

If it did, this would be a very interesting opportunity. You wouldn’t ever need to convince anybody to buy anything in order for you to make money.

They would simply be buying the same things they usually do, using a program that would save them money.

You would simply need to convince them that saving money on all their day to day purchases is a good idea. That would be a pretty easy pitch…

If it were true.

In reality, Lyconet network marketing does not seem to have any shopping partners that the average person shops at on a daily or weekly basis.

No WalMart, no Shoppers Drug Mart, no Amazon.

In fact, their largest partner is Chinese retail giant Alibaba. 

And I gotta be honest…

As a Westerner living in Canada, I don’t know a single person who has bought a single item from Alibaba.

When I discovered this, I truly lost interest in Lyconet as a business recommendation for my readers.

Lyconet Compensation Plan

There are four main types of compensation plans or pay structures commonly used by network marketing companies:

• Unilevel plan
• Breakaway plan
• Forced Matrix Plan
• Binary plan

You can learn about the details of each plan in this full MLM analysis article.

The Lyconet compensation plan is based on the Unilevel pay structure.

In a Unilevel pay structure, you can recruit as many distributors into your team as you want, and they will all be added directly underneath you in your organisation.

This is the major difference between a Unilevel structure and others.

In a Forced Matrix plan for example, you can only have a predetermined number of people directly beneath you in your organisation. Often the maximum is 3.

So in the Lyconet pay plan (Unilevel), you can grow your team as wide as you want.

But there is a maximum number of generations (depth) that you can earn from.

In the case of the Lyconet career program, you can earn from a maximum depth of 2 generations.

In reality, the way you would get paid as a Lyconet marketer resembles affiliate marketing more than it does network marketing. 

Most network marketing companies, such as Beachbody or Melaleuca, allow you to earn from multiple generations deep… in some cases you can earn from infinite levels.

Being able to earn from only two levels deep is the obvious major downside to the Lyconet compensation plan.

But in order to make up for the shortcomings of the pay structure that this company chose to use, they added a whole lot of nuance and bonus incentives.

It really is quite complicated to explain, but you can watch the video below which details the complexity of this compensation plan.

You can also read the official Lyconet compensation plan document here.

I’m sure you can see how complex and nuanced this pay structure is.

Many companies, including Lyconet, understand that no matter which of the 4 compensation plan types they choose to use, they all have their weaknesses.

This is why most MLM companies have pay plans that seem overly complex and convoluted…

They do it to make up for any shortcomings that the basic plans have so that they can maximise their distributors’ profits, as well as their own corporate profits.

How Much Do Lyconet Top Earners Make?

According to information published on Business For Home, there are currently 11 people making over a million dollars per year with Lyconet.

Here’s the list of Lyconet top earners making over 7 figures annually:

• Terje Dusend
• Andreas Matuska
• Giuliano Esposito
• Jean-Paul Schoor
• Werner Kaiser
• Daniel Gergics
• Gerry Seebacher
• Franz-Rudolf Freidinger
• Nicola Domini
• Sebastian Hager
• Antal Gergics

Even though I am not a big fan of the Lyconet business, it’s obvious that some folks are earning enormous amounts of money with this opportunity.

Is Lyconet A Pyramid Scheme?

I am generally a big fan of the network marketing business model, though I have some serious concerns about the Lyconet business.

Before we talk specifically about whether or not Lyconet is a scam or not, let’s discuss why the network marketing industry in general has such a bad reputation.

There are a few reasons that the Lyconet pyramid scheme rumours exist.

By far the biggest reason is that there have been numerous illegal Ponzi and pyramid schemes over the past few decades that have masqueraded as legitimate MLM companies.

These illegal Ponzi schemes hurt a lot of innocent people and therefore received a lot of negative press.

And because there is a fundamental misunderstanding of what network marketing really is…

These illegal scams have tarnished the reputation of network marketing, including the Lyconet business.

Is Lyconet Legit?

To answer this, we first need to understand the difference between legitimate network marketing and pyramid schemes.

In a pyramid scheme, there are no real products or services being sold.

You would simply pay for a spot in a pyramid shaped organisation. And you would be required to bring more people into the organisation in order for you to get paid.

The fundamental problem with this is that there are no products being sold.

There is no value being provided.

Since nobody is receiving true value for their money, a pyramid scheme is always destined for collapse.

Every time.

The most basic principle of economics is that people trade value for value.

We trade money (value) for a product or service (value) that we want or need.

And this is what you need to understand about network marketing:

A real network marketing company sells products that people are willing to pay for regardless of the business opportunity that the company provides.

That vast majority of the revenue comes from customers who are not even involved with the business.

They simply buy the products because they love using them.

In fact, network marketing is not really that different from any other type of traditional business.

Like any other business, they sell products that people want to buy.

The main difference is the method by which the products are distributed into the real economy.

Instead of paying millions of dollars to expensive advertising agencies and retail fees to big box stores like Wal Mart and Target… 

These companies choose instead to give their own customers the opportunity to build a large business for themselves.

It’s an opportunity for the little guy.

The regular Joe or Jane like you and me.

What About The Pyramid Shape?

Many people still get hung up on the pyramid shape that a network marketing organisation takes once it starts growing.

This pyramid shape is not what defines whether or not the business is legitimate or illegal.

I would challenge you to have a look at what the shape of a corporate business looks like.

You can see that traditional businesses take on this pyramid shaped structure as well…

The difference is that as a newly hired employee working in the mailroom, you will never earn more money than the CEO of the company.

Unless you can work your way up the corporate ladder, displacing other workers along the way, and take the CEO’s job for yourself.

With network marketing, you could certainly out-earn anybody that is above you in the organisation…

As long as you perform better.

The thing with network marketing is that there is no guarantee of an income.

You only get paid for results.

That’s it.

And if your results are better than anybody above you in the organisation, you will earn more money in the long run.

Without stomping on anyone or taking away anybody’s job.

Another Reason For Lyconet Scam Rumours

The truth is, there is a dark side to network marketing, and it definitely applies to Lyconet.

You see, many network marketing companies tend to have a bit of a cult-like atmosphere in them.

Many of the distributors make unrealistic and exaggerated claims in regards to the products or income potential.

They tend to frame the opportunity as a solution to every conceivable problem you could ever have in your life.

They can be pushy, overzealous, and quite frankly, annoying.

So after an interaction with a Lyconet marketer, many people walk away with a really bad taste in their mouth.

They could be thinking to themselves:

“If it sounds too good to be true, it probably is. Lyconet is a scam. It has to be!”

This is a perfectly reasonable reaction to have after listening to an unprofessional presentation.

So the question is, why do the Lyconet marketers behave this way?

I believe the reason is due to the type of people that tend to join the business.

You see…

Because of the low barrier to entry, most of the people who join network marketing are just regular middle class folks like you and me. 

They’re not professionals.

They’ve found this exciting new business opportunity and the thought of being able to escape the rat race and quit their job is so exciting to them.

Plus, they were likely recruited into the business by somebody else that misrepresented the opportunity.

And when they realise the amount of work and dedication that is actually required to build the business, they become desperate.

Pushy.

Obnoxious.

And thoroughly unattractive.

When you see one of your loved ones acting this way, you’d probably be worried about them.

You would think that they got roped into some type of cult.

Or scam.

And this is really where a number of the Lyconet scam rumours are born.

So to summarise: Is network marketing a scheme?

No.

But if you decide to get involved with MLM, it will be very important for you to seek out good training so that you will be able to build your business in a professional manner.

You don’t want to be part of the problem.

Don’t contribute to the struggling reputation that network marketing already has.

Unlike all the other Lyconet reviews you’ll find, I want to give you a fair and balanced perspective on this opportunity.

I’ve given you all the reasons that network marketing in general is a legitimate enterprise that can offer a real opportunity for the regular Joe or Jane.

But I mentioned that I had some concerns about Lyconet specifically.

The truth is, the Lyconet fraud allegations are not completely unfounded.

The Argument Against Lyconet

One of the most important aspects to a legitimate network marketing company is this:

The majority of the company’s revenue has to come from product sales that are completely independent of the network marketing opportunity.

This is absolutely the case with old MLM giants like Amway, Nu Skin, and Tupperware.

But with Lyconet, it’s not so obvious.

The only real product that Lyconet provides is the Lyoness rewards program. And all Lyoness shoppers are incentivised to bring more people into the program.

This is a major red flag for regulators.

In fact, Lyoness has been mired in lawsuits all over the world and has officially been deemed an illegal pyramid scheme in several countries, including:

• Norway
• Italy
• Austria

While Lyconet may not technically be a pyramid scheme, the lack of tangible value they are providing the economy truly makes it subjective.

It’s a gray area to be honest.

In my personal opinion, I do not think you should get involved in the Lyconet business.

Network marketing continues to be a target for regulators all over the world. And if you are in a legitimate MLM company that provides people with valuable products that are truly in demand, then you have nothing to worry about.

But if your government decides to investigate Lyconet, it could be shut down at any time.

And if you’ve spent a significant amount of time building your Lyconet business, your income could disappear overnight.

Not a risk I would be willing to take.

How The Sharks Feel About Lyconet

Shark Tank is an American TV show where budding entrepreneurs have the opportunity to pitch their inventions or startup businesses to a group of wealthy investors.

If the entrepreneur is successful, they will receive funding from one or more of the investors so that they can grow and scale their business.

So…

Several years ago, there was a Lyconet marketer from Canada who attempted to recruit the Shark Tank investors on national television.

It didn’t go well.

The main argument made by the Sharks was the pyramid shaped organisation that we talked about earlier.

And we know that the pyramid shape is not the real problem with Lyconet.

It’s simply the fact that they don’t actually sell any desirable products.

Not really.

Lyconet and Cryptocurrency

Around 2018, Lyconet decided to jump on the cryptocurrency bandwagon. The token they launched is called eCredits.

The video below describes the Lyconet eCredits “money” system… but take it with a huge grain of salt.

The video above claims that the eCredit blockchain is decentralised. But at 1:49 in the video, the narrator says:

Here, we still have the blocks that form the chain. But a network operator manages the access, approves the transactions, and is the only one who can see the information about these transactions.

This makes it inherently centralised.

Which is fine…

But why lie and try to tell us that it’s decentralised?

Bitcoin vs Crypto

Bitcoin was the first truly decentralised cryptocurrency to take hold in the market. 

It was anonymously launched after the 2008 financial crisis when it became painfully obvious that the global financial system is designed in a way that allows bad actors to use it for personal gain at the expense of billions of people all over the world.

There is an extremely good argument that our money really should be decentralised. As humans, we are flawed. And none of us should have the power to manipulate global money.

Because it affects everyone.

As Bitcoin and decentralisation started to capture people’s attention all over the world, developers started creating alternative cryptocurrencies.

They claimed that everything could and should be decentralised in order to avoid corruption.

But is that really true?

As Dr. Saifedean Ammous outlines in his book The Bitcoin Standard, there is no need to decentralise anything… IF our money is decentralised.

Money touches everything. And if the money is decentralised and can not be manipulated, folks will not be incentivised to engage in theft and corrupt business practices. Because if their shady business practices fail, there is no central bank to bail them out.

The only way to succeed financially would be to provide value to consumers.

To date, Bitcoin is the only cryptocurrency that has actually proven to be decentralised. The vast majority of the alternative coins are simply taking advantage of the hype around Bitcoin’s decentralised protocol.

Now I’m not saying there isn’t a practical use for alternative cryptocurrencies… but they all seem to be centralised to a certain degree. 

This means they are more similar to a stock or share of a company. And they should be marketed and regulated as such.

There have been countless Ponzi schemes that have been disguised as cryptocurrencies… many of them have collapsed and people have lost millions.

Lyconet’s foray into cryptocurrency seems to be nothing more than taking advantage of the hype that exists in the market.

Just to be clear… 

I am a big believer in Bitcoin. But I am extremely sceptical about anything that claims to be decentralised without any empirical evidence.

Lyn Alden, a macro investment strategist, makes a very good case for Bitcoin on her website… you can read that article here.

She also voices her concerns about Ethereum, a popular alternative crypto asset in this article here. And Ethereum is a very good representation of the broader crypto market (excluding Bitcoin).

The fact that Lyconet is jumping on the cryptocurrency bandwagon while ignoring Bitcoin is just one more concern I have about this company.

Lyconet Business Plan

If you decide to join Lyconet in spite of my trepidation, you should at least know how to build your business the right way.

So that you can have staying power… 

And build a long term business in a way that will not tarnish your own reputation or that of the company that you represent.

Building Lyconet Online

Most network marketing systems including Lyconet will likely require you to make a list of family and friends that you will need to talk to about your business.

This is traditionally how network marketing has been done and it can be very effective if done correctly. Read my full MLM guide here to learn the complete process.

The traditional MLM method is a fine way to build your business. But eventually, you will run out of people to talk to in your personal life.

Hopefully by the time this happens, you will have built a sizeable organisation that is starting to grow and thrive.

At this time, you might want to think about turning to the internet to expand your business. 

You might feel as though internet marketing is too technical or difficult for you to grasp…

But the truth is, an effective online Lyconet marketing plan only comes down to three key steps.

I. Build An Audience

In order for you to start acquiring shoppers and recruiting marketers for your business, you will need to build an online audience that knows, likes, and trusts you.

How do you do this?

By providing value.

The internet has become the greatest source of information in human history. But instead of just consuming information, you will need to become a creator of information.

Understand that no matter how little you think you know, there are always people who know less than you and are looking to learn what you know.

By teaching others the valuable information that you’ve learned in your network marketing journey, you will eventually become known as an expert. 

A thought leader. 

Someone with answers.

You can share your knowledge through:

• Blogging
• YouTube
• Forums
• Social media

When one of your viewers or readers is asking themselves a question, you want to be the person that comes to their mind as someone who probably has an answer.

II. Build An Email List

As your audience grows, you need to start collecting their email addresses so that you can speak directly to them. 

To do this, you will need to create and offer them a freebie, some type of valuable free gift that they can only get by signing up to your email list.

This free gift should offer incredible value in order to continue building trust.

The freebie could be an eBook, MP3 audio book, video course etc.

III. Sell Your Stuff

Once people are on your list, you can begin marketing to them. 

You should continue to provide value through your emails. 

You want your email subscribers to actually look forward to your emails so that they don’t simply delete your emails or unsubscribe from your list.

Every now and then, you can recommend a product for them to buy or take a look at your business presentation… but do it sparingly.

If you try to sell to your list too often, they will become tired of it and start unsubscribing.

A healthy ratio of value to sales is roughly 80-20. 80% value based emails, 20% sales.

This is really what internet marketing comes down to, but it’s admittedly a very simplified explanation.

If you want a detailed guide for how to make money with the Lyconet business from home and recruit marketers using the internet, check out this in-depth internet marketing tutorial here.

Lyconet Review Conclusion | Is It Worth It?

One of the first things regulators look at when examining a network marketing company is the number of folks who buy and consume the products but have nothing to do with the business opportunity.

Ideally, this number should be over 50%.

A successful business fundamentally exists to provide value to the marketplace. Making money is simply a by-product; a reward for making consumers happy.

But if a business exists solely to make money and doesn’t provide value to the economy in return, it becomes a major problem.

By definition, that is a pyramid scheme.

I wanna be fair…

Lyconet does sell a product… the Lyoness shopping rewards program.

It’s just not a very good product. Plus, everybody is heavily incentivised to sign up more people in order to save more and earn income.

The result is that the vast majority of people who use the Lyoness shopping program are also actively recruiting in order to bring more people in.

Here’s the major risk with the Lyconet business:

If your government decides to start investigating Lyconet, there is a very good chance that the business will be shut down and your income will instantly dry up.

Here’s the thing…

Network marketing can be a good opportunity. But it’s a big decision. It’s a long term plan for you to build a sustainable income that will grow over time and provide a very nice lifestyle.

So you should be quite picky with the MLM company that you decide to join. Because if your business could be shut down at any time, it is by definition unreliable.

And frankly, Lyconet could be shut down at any time.

As it has been in multiple countries around the world.

Bear in mind, this article is based on the research I personally did. I drew my own conclusion based on the information I found.

Now I wanna be very clear…

I am a huge fan of network marketing and I love the leverage that it offers regular middle class folks. I just don’t like Lyconet.

But if you personally know somebody in the Lyconet business that you trust and you decide to move forward with this, I really do wish you all the best.

You are a grown-up after all.

We’re all free to make our own choices.

But I hope that after reading this Lyconet review, you will have a better understanding of whether Lyconet is good or bad…

And whatever decision you make on this, you can move forward with confidence and conviction.

If there are any questions that I failed to answer, feel free to leave them down in the comments section below and I’ll get back to you as soon as I can.