iFreeX Prelaunch Review: The new TelexFree?

There is no information on the iFreeX website indicating who owns or runs the business.

The iFreeX website domain (“ifreex.com”) was registered on the 10th of September 2014, however the domain registration is set to private.

As always, if a MLM company is not openly upfront about who is running or owns it, think long and hard about joining and/or handing over any money.

The iFreeX Product Line

iFreeX has no retailable products or services, with affiliates only able to market affiliate membership to the company itself ($49.90 a month).

Bundled with iFreeX affiliate membership is a mobile app, which the company claims

is a free application that can be used by anyone on most mobile phones, tablets and computers to make: video talk, send messages, video conferencing and
more.

The iFreeX Compensation Plan

The iFreeX compensation plan revolves around the recruitment of new affiliates.

Direct recruitment commissions are available, along with binary and unilevel residual commissions. Profit sharing bonus pools are also available to affiliates who pay the most for membership.

Also tied into the price of affiliate membership are global earning caps:

• Free – $10 a month ($20 if ten affiliates are recruited and maintained)
• Gold – $500 a month
• Diamond – $5000 a month
• White Diamond – $25,000 a month
• Black Diamond – $100,000 a week

Recruitment Commissions

iFreeX pay commissions on the recruitment of new affiliates. How much an affiliate received per new recruit depends on how many affiliates they themselves have recruited:

• Gold – $10 per paid affiliate recruited
• Diamond – $10 per Gold affiliate recruited, $15 per Diamond affiliate recruited and $100 per White Diamond affiliate recruited
• White Diamond – $15 per Gold affiliate recruited, $20 per Diamond affiliate recruited and $150 per White Diamond affiliate recruited
• Black Diamond (sign up as a White Diamond and personally recruit and maintain ten paid affiliates) – $20 per Gold affiliate recruited, $30 per Diamond affiliate recruited and $200 per White Diamond affiliate recruited

Note that iFreeX are currently not disclosing the cost of Gold, Diamond or White Diamond affiliate membership.

Residual Binary Commissions

Residual commissions in iFreeX are paid out using a binary compensation structure.

A binary compensation structure places an affiliate at the top of two binary teams, left and right:

The binary fills left to right, with each filled position in the binary representing a recruited affiliate (recruited directly or indirectly).

Commissions are paid out by pairing newly recruited paid affiliates (Gold or higher), on either side of the binary.

Pairs are calculated using a 1:1 ratio, with how much per pair paid out determined by how much an affiliate paid to join iFreeX:

• Free – no binary commissions
• Gold – $5 per pair of paid affiliates
• Diamond – $10 per pair of paid affiliates
• White Diamond – $15 per pair of paid affiliates
• Black Diamond – $20 per pair of paid affiliates

Monthly Fee Commissions

All iFreeX affiliates are charged a monthly membership fee.

iFreeX take this fee and use it to pay out commissions via a unilevel compensation structure.

A unilevel compensation structure places an affiliate at the top of a unilevel team, with every personally recruited placed directly under them (level 1):

If any of these level 1 affiliates go on to recruit new affiliates, they are placed on level 2 of the original affiliate’s unilevel team. If any level 2 affiliates recruit new affiliates, they are placed on level 3 and so on and so forth down a theoretical infinite number of levels.

iFreeX cap payable unilevel levels at ten, with commissions paid out as follows:

• Diamond and White Diamond – 50 cents per affiliate paid out on 5 unilevel levels
• Black Diamond – 50 cents per affiliate paid out on 10 ten unilevel levels

Profit-Sharing Pools

Each affiliate membership level has an associated profit-sharing pool attached to it:

• Free and Gold – a share in 5% of iFreeX’s global revenue
• Diamond – a share in 15% of iFreeX’s global revenue
• White Diamond – a share in 35% of iFreeX’s global revenue
• Black Diamond – a share in 40% of iFreeX’s global revenue

Note that these percentages are accumulative.

Eg. At the Black Diamond affiliate level, they share all but 5% with the other affiliate levels (5% with Free and Gold affiliates, 15% with Diamond affiliates and 35% with White Diamond affiliates).

Another way of looking at the pools is as individual percentage pools:

• 5% pool – shared between all paid affiliates
• 10% pool – shared between Diamond and above affiliates
• 20% pool – shared between White Diamond and Black Diamond affiliates
• 5% pool – shared only among Black Diamond affiliates

Joining iFreeX

For reasons unknown, iFreeX are yet to reveal the cost of Gold, Diamond and White Diamond affiliate membership.

Looking at the recruitment commissions paid out at each affiliate membership level though, we can ascertain the following:

• Gold – at least $20
• Diamond – at least $30
• White Diamond – at least $200

All iFreeX affiliates (including Free affiliates) are required to pay an ongoing $49.90 a month participation fee.

Conclusion

Despite the lack of information available on the iFreeX website about company ownership and management, an idea of who is behind the scheme is revealed by it’s early promoter.

To the best of my knowledge, Sann Rodriguez has been teasing the release of iFreeX these last few weeks. He appears to be the only person publicly who acknowledged he had any idea about the company.

If Rodrigues himself is not running iFreeX (via proxy, a business partner or otherwise), then he at the very least knows who is.

On Facebook, Rodrigues markets iFreeX as potentially “the next TelexFree”:

A quick Google search reveals no shortage of iFreeX affiliates parroting this notion:

I suspect this is due to the similarities between TelexFree’s 99TelexFree VOIP app and the app bundled with iFreeX. Both cost $49.90 a month to access, with the cynic in me thinking that the iFreeX app is in all likelihood just a rebrand of TelexFree’s defunct offering.

TelexFree pretended to sell $49.90 99TelexFree to retail customers, but in reality it was mostly affiliates who used the service.

This was because by using the service, affiliates were able to participate in what was later revealed to be a billion dollar Ponzi scheme.

TelexFree was shut down by the SEC back in April. Rodrigues styled himself as the top-earner in TelexFree and claimed to have made over $3 million dollars.

Despite his massive windfall, when TelexFree was shut down Rodrigues was quick to label himself a victim.

For his part in stealing at least $3 million dollars from TelexFree investors, Rodrigues is a defendant in the SEC’s case against the company.

A preliminary injunction was handed down against him in May. This injunction, among other things, froze Rodrigues known assets in the US and, among other things, prohibits him from ‘conducting and further fraud involving securities or otherwise‘.

The topic of fraud naturally brings up to iFreeX’s compensation plan.

With no retail revenue and all commissions tied to the recruitment of new affiliates and their payment of an ongoing monthly participation fee, iFreeX falls squarely in pyramid scheme territory.

With income potential directly tied to how much an affiliate spends when they join the company, there’s also an additional “pay to play” element to the scheme.

In a nutshell, iFreeX affiliates join the company and decide how much they wish to earn by how much they pay when they join.

They then set about recruiting new affiliates and earn direct commissions based on how much these new affiliates pay for membership. Finally, as long as those recruited pay their $49.90 a month, ongoing residual commissions are paid out.

The bonus pools are simply a mechanism to redistribute affiliate fees among those who paid the most to join the company (and pulled their weight recruiting new affiliates at the Black Diamond level).

In summary, iFreeX is likely to fail any regulatory test thrown at it.

Sann Rodrigues’s participation in the scheme naturally places a big question mark over just how quickly regulators might take action against the company.

Prior to TelexFree, Rodrigues was already charged with ‘operating a fraudulent pyramid scheme targeting the Brazilian community‘.

If regulators move in against iFreeX, it would the third scam Rodrigues faces regulatory action over.

iFreeX went into official prelaunch a few days ago. Rodrigues claims to have already recruited 20,000 affiliates within the twenty-four hours of the prelaunch going live:

Other posts from Rodrigues suggest regulatory defiance, with him claiming “only god can shutdown” iFreeX, and suggestions that TelexFree was targeted by regulators due to government corruption.

Rodrigues whereabouts are currently unclear, however he is most definitely on both Brazilian and US regulatory radars. Rodrigues faces reprimand for his involvement in TelexFree, in addition to his having already been charged with scamming Brazilians in 2006.

Yet here we are, with public promotion of what is obviously a pyramid scheme being marketed as TelexFree v2.0.

Given Rodrigues strong relationship with iFreeX, there’s a high possibility of collateral damage. That is if he himself isn’t running the scheme, which would then guarantee a shutdown if regulators get involved.

Brazilian TelexFree co-owner Carlos Costa put out an announcement a week or so back claiming that “something better than TelexFree” was about to be released. Whether he was referring to iFreeX or something else though is unclear.

In any event, this probably isn’t going to end well.