TelexFREE: the scheme that promised $400 a month
TelexFREE promised $400 a month for posting ads. The investment: $1,425. The reality: withdrawals blocked until reaching $300 and an investigation in Brazil.
English · Original discussion in Spanish · Published
TelexFREE promised $400 a month for posting ads: here's how it was sold in Spain
Can you really earn $400 a month by posting one ad a day online? That's exactly what TelexFREE promised, the VoIP and advertising company that arrived in Spain presenting itself as a business opportunity that required no selling and no recruiting. The pitch was simple: pay an entry fee —$1,425 for a «family» account— and spend a few minutes a day posting ads online. In return, the company promised recurring monthly income. The message took hold in towns and cities, where stories began to circulate of people who had invested anywhere from $300 to €10,000.
The defense of the model rested on one idea: TelexFREE was not a pyramid scheme because you could earn without recruiting. "You can earn money JUST by posting your ads WITHOUT THE NEED to INVITE Anyone," read one of the most repeated arguments. The company, based in the United States and Brazil, presented itself as a sponsor of the Botafogo football club and developer of a Best Western hotel in Rio de Janeiro. New products were also announced: TelexMobile, TelexEcommerce and TelexBIT.
How much did it cost to join, and how much could you earn?
The numbers circulating were eye-catching. A «family» account cost $1,425 and, according to the most optimistic calculations, generated $400 a month. With $100,000, it was said, you could buy 70 accounts and earn $28,000 a month. In a year, $336,000. The full calculation, broken down line by line, was enough to buy an apartment in certain areas. The fine print, however, included a condition many overlooked: the money could not be withdrawn until you had accumulated $300.
The testimonies of those who joined paint a less rosy picture. One participant admitted he had invested $339 in a «central AD» and was earning $20 a week, hoping to recoup his investment in three and a half months. Another had bought a «family central AD» for $1,425 and had joined a group of 30 people who each contributed €1,500 to buy TelexFREE franchises. In total, more than €3,000 invested. "Until I have $300 I can't make withdrawals," he admitted.
The shadow of the pyramid: can you earn without recruiting anyone?
The defenders' star argument was that TelexFREE was not a pyramid scheme because it did not force you to recruit. "Every economic system is shaped like a pyramid," the argument went, comparing it to Coca-Cola or any company with a hierarchy. The difference, they insisted, was that at TelexFREE "the one who works hardest wins," not the one at the top. The reality is that the bonus and commission structure rewarded the recruitment of new participants, and the money to pay the early joiners had to come from those who arrived later.
The company justified its income through the sale of VoIP products, advertising on its platform and commercial agreements. "If you look up TelexFREE on Alexa's page, you'll see it's the 1,000th most visited site," was the argument. It was also pointed out that in Russia it was the 272nd most visited site. With two million distributors worldwide, they said, it was impossible for it to be a scam. "Search the internet and see if you can find anyone who's been scammed," they challenged.
Brazil, the courts and promises of repayment
In Brazil, the company was under investigation. One state in the country had filed a complaint against TelexFREE and the courts had blocked its operations pending the outcome of the case. The company's executives appeared at public hearings and maintained a YouTube channel with weekly updates. In that context, director Carlos Costa promised to return the initial investment to anyone who had not yet recouped it if anything went wrong. "Do you think a pyramid scheme would do this?" the defenders asked.
The Brazilian authority's response was emphatic: the investigation remained open and the funds, frozen. Meanwhile, in Spain, the first victims were beginning to appear. "Some have put in €10,000, others laugh at the first ones," one witness recounted. The question hanging in the air was simple: if the business was so profitable, why could no one withdraw their money without first putting in more?
The story of TelexFREE in Spain is that of a business sold as a once-in-a-lifetime opportunity that ended with investors waiting to get paid. Those who got in early earned something. Those who arrived late are still waiting. As with every pyramid scheme, the music stopped and some were left without a chair.
Can you really earn $400 a month by posting one ad a day online? That's exactly what TelexFREE promised, the VoIP and advertising company that arrived in Spain presenting itself as a business opportunity that required no selling and no recruiting. The pitch was simple: pay an entry fee —$1,425 for a «family» account— and spend a few minutes a day posting ads online. In return, the company promised recurring monthly income. The message took hold in towns and cities, where stories began to circulate of people who had invested anywhere from $300 to €10,000.
The defense of the model rested on one idea: TelexFREE was not a pyramid scheme because you could earn without recruiting. "You can earn money JUST by posting your ads WITHOUT THE NEED to INVITE Anyone," read one of the most repeated arguments. The company, based in the United States and Brazil, presented itself as a sponsor of the Botafogo football club and developer of a Best Western hotel in Rio de Janeiro. New products were also announced: TelexMobile, TelexEcommerce and TelexBIT.
How much did it cost to join, and how much could you earn?
The numbers circulating were eye-catching. A «family» account cost $1,425 and, according to the most optimistic calculations, generated $400 a month. With $100,000, it was said, you could buy 70 accounts and earn $28,000 a month. In a year, $336,000. The full calculation, broken down line by line, was enough to buy an apartment in certain areas. The fine print, however, included a condition many overlooked: the money could not be withdrawn until you had accumulated $300.
The testimonies of those who joined paint a less rosy picture. One participant admitted he had invested $339 in a «central AD» and was earning $20 a week, hoping to recoup his investment in three and a half months. Another had bought a «family central AD» for $1,425 and had joined a group of 30 people who each contributed €1,500 to buy TelexFREE franchises. In total, more than €3,000 invested. "Until I have $300 I can't make withdrawals," he admitted.
The shadow of the pyramid: can you earn without recruiting anyone?
The defenders' star argument was that TelexFREE was not a pyramid scheme because it did not force you to recruit. "Every economic system is shaped like a pyramid," the argument went, comparing it to Coca-Cola or any company with a hierarchy. The difference, they insisted, was that at TelexFREE "the one who works hardest wins," not the one at the top. The reality is that the bonus and commission structure rewarded the recruitment of new participants, and the money to pay the early joiners had to come from those who arrived later.
The company justified its income through the sale of VoIP products, advertising on its platform and commercial agreements. "If you look up TelexFREE on Alexa's page, you'll see it's the 1,000th most visited site," was the argument. It was also pointed out that in Russia it was the 272nd most visited site. With two million distributors worldwide, they said, it was impossible for it to be a scam. "Search the internet and see if you can find anyone who's been scammed," they challenged.
Brazil, the courts and promises of repayment
In Brazil, the company was under investigation. One state in the country had filed a complaint against TelexFREE and the courts had blocked its operations pending the outcome of the case. The company's executives appeared at public hearings and maintained a YouTube channel with weekly updates. In that context, director Carlos Costa promised to return the initial investment to anyone who had not yet recouped it if anything went wrong. "Do you think a pyramid scheme would do this?" the defenders asked.
The Brazilian authority's response was emphatic: the investigation remained open and the funds, frozen. Meanwhile, in Spain, the first victims were beginning to appear. "Some have put in €10,000, others laugh at the first ones," one witness recounted. The question hanging in the air was simple: if the business was so profitable, why could no one withdraw their money without first putting in more?
The story of TelexFREE in Spain is that of a business sold as a once-in-a-lifetime opportunity that ended with investors waiting to get paid. Those who got in early earned something. Those who arrived late are still waiting. As with every pyramid scheme, the music stopped and some were left without a chair.
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Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (44 replies).
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