Woking Borough Council in the UK, launched a Loyalty Card Scheme in April 2017.
The Loyalty scheme is run by a company called 'LYONESS'.
LYONESS/LYCONET describe themselves on their corporate page as:
'Lyoness Europe AG has been authorised by Cashback World to expand a part of the global network of small and medium-sized enterprises (SME), which belongs to the myWorld group of companies, with the help of independent sales partners. To this end, Lyoness markets the Cashback Solutions’ customer loyalty programmes, that grant SMEs innovative opportunities to retain loyal customers and acquire new ones. Lyoness Europe AG has been authorised by Cashback World to expand a part of the global network of small and medium-sized enterprises (SME), which belongs to the myWorld group of companies, with the help of independent sales partners. To this end, Lyoness markets the Cashback Solutions’ customer loyalty programmes, that grant SMEs innovative opportunities to retain loyal customers and acquire new ones. Simultaneously, Lyoness promotes a part of the international Shopping Community Cashback World, that allows its Members to save money on their daily purchases.'
Together with its partners, Lyoness is active in 43 countries across the globe and currently supports 8 million shoppers and 80,000 Loyalty Merchants in diverse sectors.. Simultaneously, Lyoness promotes a part of the international Shopping Community Cashback World, that allows its Members to save money on their daily purchases.'
The local paper were very enthusiastic, and wrote this article on their front page:
Lets Shop and Save.
Exclusive by Stuart Flitton
WOKING could become a pioneer in hosting a groundbreaking international loyalty card scheme that combines financial benefits to shoppers, businesses and charities.
The proposed scheme would involve shoppers signing up for the Woking Loyalty Card Programme with shops and other businesses in the town centre.
The card, run by International company Lyoness Management, is available in Britain but Woking Borough Council would be the first local authority in the country to team up with Lyoness.
The scheme is free to shoppers, who could get cashback up to 5% that would go into their bank accounts and also gain loyalty points. Businesses would get 0.5% on all transactions using the cards they issue, not only in Woking but in any of the 47 countries around the world where the card is accepted.
Woking Borough Council would also receive 0.5% of all transactions, which will benefit good causes through the Woking Community Foundation.
The proposed plan is to be put forward tonight (23rd March 2017) to the council executive, which will be asked to recommend that the full council appoints Lyoness to run the programme at it's next meeting on 6th April (2017).
Participating businesses will have to buy an electronic devise to process card transactions and pay a small monthly fee, but will benefit, not only directly from the money back on transactions, but by increased custom and marketing generated by the card.
It is believed that other loyalty schemes in neighbouring boroughs have been considered but dismissed on cost grounds, whereas the Lyoness version, which will be known as the Woking Loyalty Card Programme if it receives the backing of the full council, is seen as costing the authority very little, whie offering widespread benefits.
It be managed by the Councils Business Liason team as part of it's business engagement duties.
The draft plan involves the scheme being intoduced initially to the town centre, and then to other parts of the borough, with the hope that surrounding local authorities will see the advantages and join in.
It is believed that some local authorities in London are watching the planned Woking scheme closely.
Business Liason portfolio holder Cllr Saj Hussain said: 'This would be great - it will help put Woking on the map as the card will be available globally - as far apart as Australia, Dubai and elsewhere. With the benefits to businesses, shoppers and good causes, it is a win-win situation. I hope the executive and council agrees and look forward to this coming to the town.'
But 'LYONESS' have been in the spotlight for many years, in many countries, with accusations being made that it's simply a pyramid scam.
Lyoness were the subject of a court case by the Consumer Watchdog ACCC in Australia in 2014:
'THE consumer watchdog is taking a popular loyalty card company to court for allegedly operating a pyramid selling scheme.
Lyoness, an Austrian company founded in 2003, operates a ‘cashback’ scheme which provides rebates to members who shop through a Lyoness portal, use its vouchers or present their Lyoness card at participating retailers.
A number of large brands participate in the Lyoness Loyalty Program, including Vintage Cellars, Overland, Oakley, Microsoft, First Choice Liquor, Liquorland, DealsDirect, Tyrepower and Barbeques Galore.
According to the Australian Competition and Consumer Commission, although Lyoness has been investigated by regulators in other countries, this is the first court action taken against the company alleging that the Lyoness Loyalty Program constitutes a pyramid scheme.
The ACCC also claims the conduct by Lyoness breached laws against ‘referral selling’, where a consumer is induced to buy goods or services by the promise of a commission or rebate contingent on a later event.'
The ‘premium’ membership, under which members can participate in what the ACCC claims is the pyramid recruitment side of the scheme, costs $3000.
“$3000 is a good number, but there are all sorts of inducements and a lot of pressure on members to spend more and more money in the scheme,” he said.
“The manner in which pyramid selling schemes operate…is complex and elusive. The present Lyoness Loyalty Program is no exception,” said Justice Flick.
ACCC chairman, Rod Sims, said: “The judgment echoed some of the concerns the ACCC had with the scheme, in particular its complexity and the inducements that were held to prospective members”.
“The ACCC will continue to investigate schemes that encourage consumers to recruit new members. We will take action where appropriate to ensure consumers are not drawn into schemes where the financial benefits held out to induce potential members to join up rely substantially on the recruitment of further new members into the scheme,” Sims said.
The scheme is free to shoppers, who could get cashback up to 5% that would go into their bank accounts and also gain loyalty points. Businesses would get 0.5% on all transactions using the cards they issue, not only in Woking but in any of the 47 countries around the world where the card is accepted.
Woking Borough Council would also receive 0.5% of all transactions, which will benefit good causes through the Woking Community Foundation.
The proposed plan is to be put forward tonight (23rd March 2017) to the council executive, which will be asked to recommend that the full council appoints Lyoness to run the programme at it's next meeting on 6th April (2017).
Participating businesses will have to buy an electronic devise to process card transactions and pay a small monthly fee, but will benefit, not only directly from the money back on transactions, but by increased custom and marketing generated by the card.
It is believed that other loyalty schemes in neighbouring boroughs have been considered but dismissed on cost grounds, whereas the Lyoness version, which will be known as the Woking Loyalty Card Programme if it receives the backing of the full council, is seen as costing the authority very little, whie offering widespread benefits.
It be managed by the Councils Business Liason team as part of it's business engagement duties.
The draft plan involves the scheme being intoduced initially to the town centre, and then to other parts of the borough, with the hope that surrounding local authorities will see the advantages and join in.
It is believed that some local authorities in London are watching the planned Woking scheme closely.
Business Liason portfolio holder Cllr Saj Hussain said: 'This would be great - it will help put Woking on the map as the card will be available globally - as far apart as Australia, Dubai and elsewhere. With the benefits to businesses, shoppers and good causes, it is a win-win situation. I hope the executive and council agrees and look forward to this coming to the town.'
But 'LYONESS' have been in the spotlight for many years, in many countries, with accusations being made that it's simply a pyramid scam.
Lyoness were the subject of a court case by the Consumer Watchdog ACCC in Australia in 2014:
'THE consumer watchdog is taking a popular loyalty card company to court for allegedly operating a pyramid selling scheme.
Lyoness, an Austrian company founded in 2003, operates a ‘cashback’ scheme which provides rebates to members who shop through a Lyoness portal, use its vouchers or present their Lyoness card at participating retailers.
A number of large brands participate in the Lyoness Loyalty Program, including Vintage Cellars, Overland, Oakley, Microsoft, First Choice Liquor, Liquorland, DealsDirect, Tyrepower and Barbeques Galore.
According to the Australian Competition and Consumer Commission, although Lyoness has been investigated by regulators in other countries, this is the first court action taken against the company alleging that the Lyoness Loyalty Program constitutes a pyramid scheme.
The ACCC also claims the conduct by Lyoness breached laws against ‘referral selling’, where a consumer is induced to buy goods or services by the promise of a commission or rebate contingent on a later event.'
'...ACCC chairman Rod Sims told news.com.au: “The old days of simple pyramid selling don’t exist anymore, understandably. They’re complex schemes. The judgement we make at a high level is whether your money essentially comes from signing up other people rather than selling something of substance.”
'...the ACCC alleges that the Lyoness scheme also offers commissions to members who recruit new members who make a down payment on future shopping.
According to Mr Sims, Lyoness had around 50,000 members in Australia as of May this year. “Our concern was that this scheme is growing rapidly — by the nature of a pyramid it can,” he said.The ‘premium’ membership, under which members can participate in what the ACCC claims is the pyramid recruitment side of the scheme, costs $3000.
“$3000 is a good number, but there are all sorts of inducements and a lot of pressure on members to spend more and more money in the scheme,” he said.
The court judgement however, went in Lyoness's favour:
“The manner in which pyramid selling schemes operate…is complex and elusive. The present Lyoness Loyalty Program is no exception,” said Justice Flick.
ACCC chairman, Rod Sims, said: “The judgment echoed some of the concerns the ACCC had with the scheme, in particular its complexity and the inducements that were held to prospective members”.
“The ACCC will continue to investigate schemes that encourage consumers to recruit new members. We will take action where appropriate to ensure consumers are not drawn into schemes where the financial benefits held out to induce potential members to join up rely substantially on the recruitment of further new members into the scheme,” Sims said.
LYONESS were also investigated by the Norwegian Gaming Board in 2013, and then again in 2018.
'... the Lottery Authority has assessed whether Lyoness is an illegal pyramid-like sales system pursuant to section 16, second paragraph, of the Lottery Act.
In the assessment, we have assumed that revenues from Lyoness’s business in Norway are mainly from the acquisition of participants, and not from sales or consumption of goods, services or other benefits.'
'Notification of resolution means that all repatriation of participants and loyalty companies to CashBack World and Lyconet, and all sales and use of benefit cards, discount coupons, customer shares, gift cards, promotional materials, seminars and other products in the workplace must be terminated.'
On January 11th 2018 , the Norwegion Lottery Authority concluded that Lyoness was indeed a pyramid scam and banned LyonessEurope AG and Lyoness Norway AS, from operating in Norway.
But it's the affiliate scheme associated with the points system that looks suspect to me.
'Lyconet' have a very complicated points system that's brilliantly deciphered here:
http://behindmlm.com/companies/lyoness/lyconet-review-unit-commissions-that-dont-add-up/
Put simply: The points you earn from shopping can be used to qualify for affiliate commissions. And if you bring in people under you, you receive commissions when they earn points. And they in turn, earn commissions when they bring in more people...and so on, and so on. So the scheme is the shape of a triangle, the base just keeps getting bigger and bigger with every new layer of referrals.
'Cashback World'
Neither do MORRISONS:
I haven't had a reply from Tesco's yet, but as Tesco has their own very successful loyalty card, 'CLUBCARD', I'm going to safely assume that the answer will be a 'no' also.
So why are Lyoness displaying famous logos on their 'Cashback World' website, claiming that household names accept them, when they don't?
And interestingly, the ARGOS logo is not displayed on the cashback site, but Argos do accept the card:
The Lyoness Website:
https://www.lyoness.com
The Cashback World website has a disclaimer at the bottom:
The Lyoness website mentions the word 'investment' quite prominently.
'... the Lottery Authority has assessed whether Lyoness is an illegal pyramid-like sales system pursuant to section 16, second paragraph, of the Lottery Act.
In the assessment, we have assumed that revenues from Lyoness’s business in Norway are mainly from the acquisition of participants, and not from sales or consumption of goods, services or other benefits.'
'Notification of resolution means that all repatriation of participants and loyalty companies to CashBack World and Lyconet, and all sales and use of benefit cards, discount coupons, customer shares, gift cards, promotional materials, seminars and other products in the workplace must be terminated.'
On January 11th 2018 , the Norwegion Lottery Authority concluded that Lyoness was indeed a pyramid scam and banned LyonessEurope AG and Lyoness Norway AS, from operating in Norway.
Seeming to disassociate themselves from these accusations, 'LYONESS UK LTD' have changed their name in the UK to: 'My World UK'.
I emailed Woking Borough Council to ask if the scheme was still up and running, or had it closed down, and this was their reply:
The Scheme:
Dear Tara,
Thank you for your email. Although Woking Borough Council supports the Woking Loyalty Scheme, we do not run it. The scheme is currently seeking businesses to offer the card and there is a plan to start distributing loyalty cards to the general public. So no, it has not closed down.'
The Woking Loyalty Card scheme is free to Woking shoppers, and points can be earned without ever handing over a penny, which in theory, sounds great.
But it's the affiliate scheme associated with the points system that looks suspect to me.
'Lyconet' have a very complicated points system that's brilliantly deciphered here:
http://behindmlm.com/companies/lyoness/lyconet-review-unit-commissions-that-dont-add-up/
Put simply: The points you earn from shopping can be used to qualify for affiliate commissions. And if you bring in people under you, you receive commissions when they earn points. And they in turn, earn commissions when they bring in more people...and so on, and so on. So the scheme is the shape of a triangle, the base just keeps getting bigger and bigger with every new layer of referrals.
'Cashback World'
Cashback World sells three types of packages to Merchants, who then get varying degrees of benefits, including Point Of Sale materials, Loyalty Cards, Support Services etc. The Merchants can then give their cards away free to their customers, who can then use the card in other participating Merchant stores, earning cashback/points from any purchases. The Merchant also makes money every time their card is used at another Merchants store.
There are the three levels of packages:
LIGHT - which has a one-off payment of £400.
BASIC- which costs either £31.90 a month OR a one-off charge of £720.00, and
PROFESSIONAL - which costs either £71.90 a month or a whopping one-off fee of £1040.
But in order for Merchants to re-coup their investment, they have to have a lot of repeat customers into there store, on a regular basis. Because not only are they paying (monthly) for a terminal to process these loyalty cards, they're also obliged to give discounts on their stock, which reduces their already wafer-thin profit margins.
If every single shop/business in Woking used this Loyalty Card, they would all have to give a discount on every single item brought. How is that economically viable? Isn't this loyalty card more likely to drive prices up, than offer savings?(If any Merchants from Woking are reading this, I'd love to hear your viewpoint and the reality of how this scheme works. Please leave your comments at the end of this post.)
The Merchants:
Cashback World claims to have over 80,000 merchants listed, and have logos from major retailers like Tesco, Morrisons and Marks & Spencer on their website.
If every single shop/business in Woking used this Loyalty Card, they would all have to give a discount on every single item brought. How is that economically viable? Isn't this loyalty card more likely to drive prices up, than offer savings?(If any Merchants from Woking are reading this, I'd love to hear your viewpoint and the reality of how this scheme works. Please leave your comments at the end of this post.)
The Merchants:
Cashback World claims to have over 80,000 merchants listed, and have logos from major retailers like Tesco, Morrisons and Marks & Spencer on their website.
So I did a little checking, and guess what?
Marks and Spencer (M&S) DON'T take them.
Marks and Spencer (M&S) DON'T take them.
Neither do MORRISONS:
I haven't had a reply from Tesco's yet, but as Tesco has their own very successful loyalty card, 'CLUBCARD', I'm going to safely assume that the answer will be a 'no' also.
So why are Lyoness displaying famous logos on their 'Cashback World' website, claiming that household names accept them, when they don't?
And interestingly, the ARGOS logo is not displayed on the cashback site, but Argos do accept the card:
p.s The 80,000 merchant post was snipped on Monday 16th April.
Today, Wednesday 18th April, they seem to have accumulated an extra 10,000 merchants from somewhere, as now they're claiming 90,000!
So is 'Lyoness/Cashback World' a scam or a legitimate company?
The greatest source of information on any company, is from it's consumers.
And these Lyoness consumers aren't very complimentary about them:
https://lyoness.pissedconsumer.com/real-scam-201802251197439.html
:
Lyoness on Television
Lyoness was pitched on the Canadian version of Dragons Den, and I think you
Today, Wednesday 18th April, they seem to have accumulated an extra 10,000 merchants from somewhere, as now they're claiming 90,000!
So is 'Lyoness/Cashback World' a scam or a legitimate company?
The greatest source of information on any company, is from it's consumers.
And these Lyoness consumers aren't very complimentary about them:
https://lyoness.pissedconsumer.com/real-scam-201802251197439.html
Lyoness on Television
Lyoness was pitched on the Canadian version of Dragons Den, and I think you
can probably guess how that turned out:
The Lyoness Website:
https://www.lyoness.com
The Cashback World website has a disclaimer at the bottom:
The Lyoness website mentions the word 'investment' quite prominently.
WE HAVE SOME QUESTIONS FOR YOU:
- Would you like to offer attractive added value without a large investment?
- Would you like to cut your marketing costs but still run successful marketing campaigns?
- Fed up of struggling against large multi-national businesses?
- Keen to learn more about your customers as well as your market and its potential?
If CashWorld are selling their packages as an 'INVESTMENT' shouldn't they be registered as such? Maybe that's something the Financial Conduct Authority can look at?
https://www.fca.org.uk
In conclusion, if Woking Borough Council and a national retailer like ARGOS accept the Lyoness 'Cashback World' Loyalty Card, then we have to presume that their respective legal departments would have looked at the card and scrutinized the company issuing it?
But I'm going to agree with the Norwegian Authorities and the Canadian Dragons and say:
'Thanks, but I won't be investing'!
20th April 2018
I found this blog link today which is full of heartbreaking stories of people losing money from Lyoness. How can anybody in their right minds believe that Lyoness is anything other than a scam?
http://cc-lyoness.blogspot.co.uk/
1st May 2018
2nd November 2018
Argos are no longer a member of Cashback World:
That's the good news. The bad news is:
Woking Council still are!
And they can't plead ignorance. All the Council members who are associated with this scheme have been told about it, many times.
But they STILL refuse to discuss it!
So whose getting all of the referral commissions I wonder!!
https://www.fca.org.uk
In conclusion, if Woking Borough Council and a national retailer like ARGOS accept the Lyoness 'Cashback World' Loyalty Card, then we have to presume that their respective legal departments would have looked at the card and scrutinized the company issuing it?
But I'm going to agree with the Norwegian Authorities and the Canadian Dragons and say:
'Thanks, but I won't be investing'!
20th April 2018
I found this blog link today which is full of heartbreaking stories of people losing money from Lyoness. How can anybody in their right minds believe that Lyoness is anything other than a scam?
http://cc-lyoness.blogspot.co.uk/
1st May 2018
'...designed by Global experts'
Indeed.
I've got a facebook page dedicated to Cashback World, so please pop over and like it, thanks:
https://www.facebook.com/cashbackworldponzi2nd November 2018
Argos are no longer a member of Cashback World:
That's the good news. The bad news is:
Woking Council still are!
And they can't plead ignorance. All the Council members who are associated with this scheme have been told about it, many times.
But they STILL refuse to discuss it!
So whose getting all of the referral commissions I wonder!!
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