If you were running a business and were looking at advertising options, how much would you consider paying someone to publish unsolicited and untargeted ads on ‘free to publish’ classified ads on the internet?

10 cents an ad? 5 cents… even less?

If TelexFree are to be taken seriously, they believe that advertisers are willing to pay you $2.85 per ad you publish.

Read on for a full review of the TelexFree MLM business opportunity.



The Company

TelexFree claim to be headed up by a Mr. James Merrill (also credited as “Jim Merrill”, photo right).

Born in 1961, Son of a traditional American couple, James Merrill graduated in the class of 1985 in economics at Westfield State University.

Man of great vision, he saw a large market at meeting some Brazilians and learning how much they spent to call Brazil. Knowledgeable of a new technology at the time (VoIP) decided to found in 2002 Telexfree Inc. to serve this market.

There is an image on the TelexFree website showing what appears to be company registration record in the US state of Massachusetts. A quick visit to the Corporations Division of Massachusetts (punch in “telexfree” into the search box) confirms that such a record exists, however “TelexFree Inc” itself only came into existence earlier this year.

Prior to TelexFree Inc the company was known as Common Cents Communications, which was established in 2002 with Jim Merril serving as Treasurer and Clerk and Carlos Wanzeler as company President.

No explanation is given as to why the company changed its name.

Furthermore I wasn’t able to find any information on Common Cents Communications other than they appear to have had less than 5 employees and were involved in telecommunications (probably VOIP as the TelexFree website mentions).

If I had to take a guess I’d say the renaming of Common Cents Communications to TelexFree was to start fresh and introduce a MLM compensation plan into the business (Common Sense Communications was not MLM). The domain ‘telexfree.com’ was only registered on the 30th January 2012 so this fits timeline wise.

Curiously enough, James Merrill is credited as being TelexFree’s founder and President, however the Massachusetts company registration clearly lists the President of TelexFree as Carlos Wanzeler (photo right). Wanzeler’s name does not appear anywhere on the TelexFree website, although his name does appear as the ‘administrative contact’ for the domain ‘telexfree.com’.

The actual registrant of the TelexFree domain is listed as ‘Disk a Vontade’, operating out of a PO Box in Massachusetts.

From the Disk a Vontade website, it appears to be a company offering VOIP services. Not surprisingly, Disk a Vontade’s domain (‘diskavontade.com’) is registered to Wanzeler indicating he owns the company.

Meanwhile Disk a Vontade offer a distributor program (I don’t think it’s in MLM but I’m not 100% sure as the company website is  in Portuguese) and at a recent company event in Brazil, sitting next to Wanzeler was none other than James Merrill:

The exact relationship between TelexFree and Disk a Vontade is uncertain based on what I’ve been able to find but it appears as if both companies are operated out of the US, share key management and have a target market in Brazil.

Why none of this is openly disclosed on the TelexFree website is a mystery (particularly why Merrill is publicly credited as President of TelexFree when official documents filed with the state of Massachusetts show Wanzeler as holding this position).



The TelexFree Product Line

TelexFree has a “customer” section on their website where the company markets a product called “99TelexFree”.

99TelexFree is a telephone service that costs $49.99 a month and provides

  • free calls between mobiles on the carriers “Vivo-claro-tim” and “Oi” (Brazillian carriers?)
  • free calls to any landline in Brazil
  • free calls to mobiles and landlines in the US and Canada


Additionally TelexFree company membership is also marketable by members, with membership granting participation in the TelexFree compensation plan and attracting a commission upon sale.



The TelexFree Compensation Plan

TelexFree offer members the opportunity to earn an income via the publishing of unsolicited advertisements on the internet, the sale of the 99TelexFree communications plan and the recruitment of new TelexFree members.


AdCentral Commissions

Once a prospective member has paid TelexFree $299 they are then required to publish one pre-prepared advertisement a day to a “free ad site on (the) internet”.

TelexFree do not state any further information, such as where the ads come from, who they are for or where specifically members will be publishing them.

If a member publishes one ad each day of the week, TelexFree claim a payout of $20 ($1040 annually).

One membership position in TelexFree is called an ‘AdCentral’, with each member able to have 5 membership accounts (called an “AdCentral Family Membership”) for an annual cost of $1375.

These five memberships can be bought together in a lump sum or incrementally ($299 for the initial membership and then $269 for each of the four additional memberships allowed).


Recruitment Commissions

TelexFree pay members $20 per recruitment of a new member who purchases an AdCentral membership ($299) and $100 per recruitment of a new member who purchases an “AdCentral Family Membership” ($1375).


99TelexFree Commissions

99TelexFree is a communications plan offered by TelexFree that costs $49.99 a month.

Using a 5×5 matrix, TelexFree pay out a percentage commission on the sale of each 99TelexFree plan sold.

A 5×5 matrix starts with you at the top and then branches out into 5 legs underneath you (your level 1). In turn, these five legs branch out into another 5 legs (your level 2) and so on and so forth down five levels. To give you a visual, the first few levels of a 5×5 matrix look something like this:

Each of these positions is filled by a 99TelexFree subscriber and how much of a commission earnt depends on where this customer falls on your matrix (matrices are filled top to bottom):

  • Level 1 (5 positions) – $4.99 per subscription
  • Levels 2 to 5 (3905 positions) – 99 cents per subscription


Binary Commissions

TelexFree use a binary compensation structure to pay out commissions on the recruitment of new members and their payment of membership fees.

A binary compensation structure starts with you at the top and branches out into two legs under you (your level 1). In turn, these two legs branch out into two legs (your level 3) and so on and so forth:

The first two members placed in your binary compensation structure form the basis of two teams, split equally down the middle. You have to recruit the first two new members in order to qualify for TelexFree’s binary commissions but thereafter any new members recruited by those already in your binary are also placed in your binary.

The first of the binary commissions paid out by TelexFree is a flat 40 cents a week commission per member in your binary team (regardless of which side they are on).

The second binary commission offered is based on the pairing of new memberships on both your left and right binary sides. For example, if you recruited 6 new members and 3 fell on your right team and 3 your left, you’d earn a $60 (3 * $20) paired binary commission that day.

If however 4 of these newly recruited members were placed on your left team and only 2 on your right, you’d earn a paired commission on two pairs (2 on the left and 2 on the right) with the extra 2 on the left team carrying over, waiting to be paired up.

These paired binary commissions are capped at 22 cycles a day ($440).


Bonus Pool

If a TelexFree member manages to sell 22 AdCentral membership positions in 20 days of any given month, they are eligible for a share in a bonus pool which is made up of ‘1% of the company’s business volume‘.



Joining TelexFree

Membership to TelexFree is $299 annually with members able to purchase an additional four membership positions for $269 each.



Conclusion

The corporate structure of TelexFree and the obvious business relationship between the company and Disk a Vontade and complete lack of disclosure on either company’s website is cause for concern.

As it currently stands, it appears as if TelexFree are mere resellers of the VOIP technology owned and operated by Disk a Vontade. Both companies appear to be owned by Carlos Wanzeler though but TelexFree’s website states that James Merrill is the founder of TelexFree.

I think clarification on these points by the two companies, Wanzeler and Merrill would go a long way as currently the nature of the structure and relationship between both companies is ambiguous to say the least.

Business model wise while there is a legitimate aspect of the TelexFree MLM business opportunity, it’s certainly disappointing to see so many apparently dubious aspects that overshadow the company as a legitimate MLM income opportunity.

On the legitimate side you have the telecommunications service plan which is readily able to be marketed at a retail level by members. Commissions paid out here are on the sale of an actual product and you don’t have to be a TelexFree affiliate to purchase the product.

The fact that TelexFree might just be resellers of Disk a Vontade’s VOIP services doesn’t really matter given that TelexFree members are able to market the service at a true retail level.

Things however start to fall apart when you consider the whole ‘AdCentral’ side of the TelexFree business. First and foremost is the weekly guarantee of $20 a week for what is essentially publishing spam on the internet (unsolicited advertising).

Obviously the idea here is to attract third-party advertisers but let’s face it, at $2.85 an ad published (where the ad is published appears to be entirely up to the discretion of the TelexFree member publishing it), this is pretty steep.

Far more likely I suspect is the idea that all TelexFree members will be doing is publishing ads advertising the income opportunity itself. I wasn’t initially sure if TelexFree themselves would be supplying inhouse ads to their members to publish but this was confirmed in the company’s ‘Terms and Conditions’:

The Promoter shall have no liability for the services and/or products announced in our ads that he publishes in ad sites on the Internet, thus the responsibility is on behalf of the advertiser itself, being Telexfree itself or any business partner that will use the announcement service of the company.

I don’t think TelexFree are going to have much luck attracting third-party advertisers at those prices, meaning the bulk of ads are just going to be marketing the opportunity itself.

It is my hope that this can be confirmed or denied at a later date if a TelexFree finds themselves reading this review and wishes to clarify this point.

Personally I believe the ridiculously high membership fee charged by TelexFree (a $299 fee to publish ads for the company?) and the fact that individual members are able to purchase up to five membership positions strongly indicates a lack of external revenue here.

Ultimately each AdCentral account is bringing in $299/$269 while paying out $1040 a year. The idea here appears to be the hope that a TelexFree member will bring in more than 3 new members during the course of their membership year to cover their $1040 commission payout.

When you consider that the binary commissions rely on a minimum of two recruited members to qualify, this again only strengthens this idea. Also supporting this is the qualification of the Bonus Pool being the selling of 22  new membership positions in 20 days with the company promising to pay out ‘1% of the company’s business volume‘.

What’s the bet that this “business volume” primarily consists of membership fees being paid for new AdCentral positions?

Not to mention the flat $20 incentive paid out exclusively on the recruitment of new members.

The problem of course with the above scenario is that once new and existing members stop purchasing membership, the entire business will fall apart due to the sales of telecommunications services and third-party advertiser revenue not nearly being able to cover a guaranteed $20 a week per AdCentral account payout.

There appears to be far too much weight on the dubious ‘publish an ad a day and earn $20 week’ side of the TelexFree MLM opportunity when contrasted to the telecommunications side of things and my opinion is this in itself inadvertently reveals where TelexFree believes they bulk of company revenue will be sourced from. That being the sale of TelexFree membership and AdCentral positions rather than telecommunications services and third-party advertisers.

Anyone looking to join TelexFree would be strongly advised to check with the person looking to recruit them as to how many telecommunications subscribers they have who are not TelexFree members and the percentage of third-party advertiser ads they have been required to publish since joining, as opposed to TelexFree ads advertising the income opportunity itself.

The answer to both questions should give prospective members a pretty good idea of what’s going on behind the scenes of TelexFree and where the bulk of their commissions revenue is coming from.

As a final note, I’d naturally welcome anyone who does get a chance to ask these questions to share the answers they receive as a comment below.