TelexFree under criminal investigation in Brazil
Using the old “invest with us, do pointless tasks for us and we’ll pay you a ROI with new investor money each week” business model, it comes as no surprise that authorities in Brazil have launched an investigation into TelexFree.
On the 11th of January the Brazilian Bureau of Consumer Protection (known as Procon), after receiving numerous enquiries about the business and having launched their own investigation, put out a press release (in Portuguese) advising it had ‘detected evidence of crimes‘.
The investigation initiated by civil prosecution of Consumer Protection (no. 01/2013) shows several controversial issues and possible crimes that put consumers at risk in time to accept that kind of deal.
Among the possibilities, there is a breach in the Federal Law No. 1.521/51, art. 2, according to which it is a crime:
“Obtaining or attempting to obtain illicit gains at the expense of the people or of undetermined number of people through speculation or processes fraudulent (‘snowball’, ‘chains’, ‘pichardismo’ and any other equivalent)” including Ponzi pyramid”.
There is also the possible violation of the Code of Consumer Protection (CDC), with false advertising, failure of product information and company, abuse of weakness or ignorance of consumers and conditions unreasonable disadvantage, among others.
In light of this discovery, the agency lodged a complaint against Telexfree and forwarded it to the State Prosecutors Office, the Minister of Finance and the Federal Police.
None of which have thus far publicly commented but have no doubt since launched their own investigations into the company.
Not only do TelexFree utilise a Ponzi scheme business model for their “AdCentral” commissions, but they also utilise a pyramid scheme structure offering straight recruitment commissions and binary recruitment commissions. These commissions directly compensate existing affiliates upon the recruitment of new affiliates into the scheme.
Last I heard, having most likely exhausted the local Brazilian market TelexFree were now trying to make inroads into the US. At the time of publication, Telexfree is traffic ranked by Alexa as 57th in Brazil, 462nd in Portugal and 11,263rd in the US.