TelexFree Review: Is TelexFree A Ponzi Or Pyramid Scheme? Some Regulators Think So!

Over the last few months more and more people have been asking us about TelxFree. In each contact I have made it clear the red flags and regulatory scrutiny, plus the seemingly lacking concern from TelexFree about all the issues for too long, causes me concerns. From the outside looking in and from reading court records and critics editorials, I would say this company has Ponzi and Pyramid issues written allover it.

Now let me be very clear. At this time NO North American regulatory agency at a State of Federal level has publically called TelexFree’s business model into question. And just because TelexFree has violated Brazil’s regulations, means they have violated any North American laws… But I have found where independent reps are promoting the company illegally and in doing so is causing TelexFree to be promoted as an un-registered security, which is a violation of the 1933 Securities Act here in the USA.

Below are some of the issues already facing TelexFree and why I personally believe the risk is too high for this to be a long term play for independent professionals. Unless TelexFree changes their business model, this company will close and forever be seen as a ponzi or pyramid scheme.

Procon denounces Telexfree for MPT Ministry of Finance and Federal Police

The civil investigation initiated by the prosecution of Consumer Protection (No. 01/2013) shows several controversial issues and possible crimes that put consumers at risk in time to accept this kind of business. 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 illegal gains at the expense of people or indeterminate number of persons for speculation or fraudulent processes (‘snowball’, ‘strings’, ‘pichardismo’ and any other equivalent)” including Ponzi pyramid.

Justice Acre denies another appeal and suspended Telexfree follows

The Justice Acre decided to keep the injunction suspending the activities ofTelexfree . The interlocutory appeal was dismissed on Monday (12) by the 2nd Civil Chamber of the Court of Acre (TJ-AC).

During the trial, the public prosecutor William Silva asked abstention claiming to have ‘interests’, as members of his family invested in the company. Instead, the prosecutor Alvaro Pereira gave the opinion of the prosecutor.

Superior Court denies injunction of Telexfree

The Superior Court of Justice (STJ) and deemed extinguished early on Wednesday (28), the injunction that the company Ympactus Comercial LTDA was filed in the last 21 days. The decision was issued by Minister Maria Isabel Gallotti and posted on the website of the superior court.

We have also seen where like most ponzi types of businesses the USA side of TelexFree is now getting hit with fraud and that is causing huge issues. This last week we even saw where GPG the company providing payment and merchant services to TelexFree severed ties.



Global Payroll Gateway (GPG) can no longer support TelexFree. Therefore TelexFree will be transitioning all worldwide commission payouts to the new TelexFree E-Wallet system, powered by International Payout Systems (IPS).

You should expect a welcome email from the new TelexFree E-Wallet system by tomorrow, Friday 9/13.

All requests from TelexFree starting with September 3rd will be processed by this new system. All past transactions that were loaded into GPG will be processed by GPG.

Please contact TelexFree directly if you have any questions.

Thank you,

Global Payroll Gateway


Troy Dooly

Troy Dooly is recognized internationally as an influencer in the areas of personal branding, leadership development, marketing campaigns, organizational expansion, and corporate launch strategies. Dooly is a speaker, results coach, and radio host. He is a founding member, show host (Beachside CEO) and News Director of the Home Business Radio Network. He is a founding member, and currently serves on the Board of the Association of Network Marketing Professionals

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Troy Dooly is recognized internationally as an influencer in the areas of personal branding, leadership development, marketing campaigns, organizational expansion, and corporate launch strategies. Dooly is a speaker, results coach, and radio host. He is a founding member, show host (Beachside CEO) and News Director of the Home Business Radio Network. He is a founding member, and currently serves on the Board of the Association of Network Marketing Professionals

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56 thoughts on “TelexFree Review: Is TelexFree A Ponzi Or Pyramid Scheme? Some Regulators Think So!

  1. I wonder if a US bankruptcy is lurking around the riots that will take place this week in Massachusettes


  3. I use the VoIP system from the Telexfree and I don’t call Brazil. I call to Russia, Ukraine, Portugal, Tchec Republic and Canada. The price is cheap. I went to Netherland and I sold “only” Telexfree VoIP system. I didn’t registered nobody, because I was there to show the phone system. And many people got it. They were paying $450.00 / month for regular cell phone lines and now they could pay $50.00 / month, for 3000 min. Is it a good deal? I’m sorry to say, but you must get better informed about this product.

  4. A very good question. Inmost cases when the right consulting and legal team gets involved, they will review everything the company has been doing, and will also review the regulatory concerns.

    Once that is completed they will present to the company the recommended changes. In this case it looks at least on the surface that Telexfree is taking to heart what their team has told them.

    If the new plan is done correctly maybe we will see a company clean up its act.

  5. TelexFree has just changed their compensation plan. It is bringing a lot of red flags why they are doing that. If they were not a Pyramid why are they changing after everything is happening in Brasil. They know if they have an audit they will not survive, that’s why they’re fighting for that not to happen.

  6. Telexfree have a real product which I personally use to call my family out of the country. First symptom for this not to be a ponzy, In TelexFree you don’t have to pay a high amount of money to sell their product (only $50-registration fee) this will allow you to sell the product and make commissions. Now in order for you to be a promoter yo have to buy 10 or 50 software-(company telephone minutes/real product) to promote it during your year of contract with the company. You pay $289 to get 10 software to sell + the $50 of registration fee = $339, or $1375 + 50 registration fee= $1425 to get 50 software to sell, So let’s say I bring a new prospect to the company as a promoter, you basically buy from my stock 10 or 50 software packages ($289-$1375) from where the company will pay me my commission, Simple as that.

  7. Telexfree have a real product which I personally use to call my family out of the country. First symptom for this not to be a ponzy, In TelexFree you don’t have to pay a high amount of money to sell their product (only $50-registration fee) this will allow you to sell the product and make commissions. Now in order for you to be a promoter yo have to buy 10 or 50 software-(company telephone minutes/real product) to promote it during your year of contract with the company. You pay $289 to get 10 software to sell + the $50 of registration fee = $339, or $1375 + 50 registration fee= $1425 to get 50 software to sell, So let’s say I bring a new prospect to the company as a promoter, you basically buy from my stock 10 or 50 software packages ($289-$1375) from where the company will pay me my commission, Simple as that. Telexfree counts with a real real good product that allows us to call international to over 40 countries and which makes them not a ponzy scheme.

  8. Well, not totally true. Brazil has regulations, laws, and plenty of proof.

    However, one of the issues that faces TelexFree and other companies in Brazil and other countries where Ponzi’s have taken hold, is they are finally cracking down.

    Brazil over the last few years have seen their people hurt due to many Ponzi’s coming in and taking money out of the economy and they are tired of it.

    They have reached out to the direct selling community to help strengthen their laws, and are now coming down hard on those companies they see violating the laws.

    And as with all new laws, there will need to be some pushback against them, to make sure they do not violate any other laws on the books.

    India and Brazil are two countries where I feel in a couple of years, many legit direct sales companies will start to expand because the regulations are very clear, and the companies will know exactly how to present their products and income opportunity.

    However, there is always one loaded cannon, that the regulators look for, and companies, in most cases do not control… Independent Reps!

    If the reps for Telexfree and other companies continue to promote the income opportunity in an illegal manner, then expect them to continue having issues.

  9. I have not said they were not legal in the USA. I have questioned some of the compensation structure used in the USA.

    Now to some of your other statements.

    1. Zeek Rewards was an INC and paid their taxes also. But as we now know, they were a ponzi. Being a corporation and paying taxes doesn’t mean a company is legal or illegal.

    Madoff, Standford and ENRON were all corporations and paid taxes.

    And I do not know of any retirement accounts Telexfree is paying.

  10. Why do you say Telexfree is not legal, if the company is an INC, and pay millions dollars in taxes every year, this money , for sure, is helping the American Governament, to pay salaries to the american retireds people allover the USA,and maybe, including yours !

  11. Why do you say the TelexFree is not legal in the USA, if they are TelexFree Inc, allready registered and payng millions dollars in taxes every year, and by the way, this money, is helping to the governament to pay salaries allover the country, maybe, including yours !

  12. Based on your comment, I am going to assume you are new to this community, otherwise you would realize we all people from both sides of a debate to share their views.

  13. What did I lie about? In most cases you articulate yourself well. In this case I am not sure what you are stating I lied about.

    Now if you are staging “I lied about my involvement with Rex Venture Group” then I did not lie, I just did not explain how I was getting paid!

    I should have been more specific in the fact, I was working to help fix the issues with the compensation model.

    Instead I just stated I am speaking at their events on compliance and they are paying my expenses.

    And I have been very clear on radio interviews, videos and in writing, that I violated the letter and the spirit of the law by not being 100% clear.

    And the SEC agreed that I was 17% unclear!

  14. Again, you are incorrect! GPG handles some of the largest direct selling companies in the world! Their ability to ramp up for any client worldwide is well known, and that is one reason companies use them.

  15. You are 100% correct I LOVE to provoke arguments! And the reason that is so true, is because without a valid argument at times, people will fall for the only side of the story that touches their emotions.

    And when it comes to leading people to throw their hard earned money into a company with high risk, then someone has to raise the arguments and point out the risks that can be involved!

    And when it comes to the “Letter of the Law” which is what regulators in the USA look at, the do not care if a person was excited and used “investment” instead of “joined”. What they will see is, that a common average person, thought they were buying an investment in Telefree!

    And then guess what, you and everyone else will get the wonderful opportunity of stating… “it was just a mistake!”

    And unlike the majority of critics from the inside or the outside, I have a deep understanding of how the regulators work, due to my own personal experience with them.

    So, please understand, I really don’t care if you or anyone else likes the fact I raise the arguments. I only care that anyone who is really doing the due diligence on a company gets both sides of the argument so they can make an informed decision as to the risks facing them!

  16. I stated that Tim did a “well done” job articulating his position on the Telexfree debate.

    He didn’t just state “telexfree is a scam”, he took the time to articulate his position and back it up with analysis.

  17. ROFLOL… First let me say thank you for at least sharing your opinion and worldview.

    Now let’s look at what you said and see if it truly holds water when looking for information on this website.

    1. You are correct this website is one of many my company owns in several niches.

    2. However, where you are way off base, is when you state that your belief is “everything on it is your opinion and nothing else.” That statement is totally false and goes to show that you do not review the information on this site, and may never have taken time to read the info on this site.

    3. As for the comment on the bio, it seems you write contradictory statements. First you state “I pimp myself” then you complain about the links not working. If I was pimping myself, then the logical conclusion would lead one to realize I would make sure the links work.

    But, in all fairness, exactly what do you feel should be listed in a bio?

    4. You do bring up a point that “anyone can say anything. However, when that happens, it is called out very quickly. In my case, all you have to do is Google and you can find what others say, see pictures from events, and track my history.

    5. ROFLOL… The link above sport goes directly to the SEC documentation. :)

    As for news worthy site… You just hit the nail on the head. My sanction by the SEC was NOT news worthy at all! But instead of hiding it and pretending it never happened, I addressed it head on.

    Again, thanks for coming by and sharing your thoughts.

  18. I can’t speak for Michael Adamonis, but I will give you my own answer to what I believe his “point” was…. and that is this:
    Why would anyone feel the need to listen to the advice of anyone who has himself been involved in trouble with the SEC? Your opinions no longer hold any level of credibility to me – and let’s be clear here – this website is YOUR own website and therefore everything on it is your opinion, and nothing else. Also, pimping yourself on your bio as being on the Board of Directors of some association that you founded (which, by the way links to a dead website) also doesn’t give you much credibility. Anyone can say stuff like that about themselves in order to look better to the public. Also, the article link you included to your response above to Michael Adamonis – asking us to review – is again from your own website. Show me something from a real, credible news agency. And c’mon – please don’t speak about yourself in the “third person”. That is so incredibly lame.

  19. where are the consumers of your products?! I have never met a single person with a telexfree international calling plan or whatever it is. from here to Brazil. I have many friends whom speak well of it, none of them showed me the GREEN GREEN but everyone wants to suck you into the loop

  20. ROFLOL… this is all you want to post?

    Exactly what is your point?

    Now what you may want to do is think about my Sanction and ask yourself the following questions…

    1. What did Troy learn from his experiences with the SEC?

    2. Does Troy now have an inside track to what the SEC and other regulators are calling Ponzi Schemes, un-registered securities, and pyramid schemes?

    3. Does Troy have off the record info regarding potential regulator issues or actions?

    In closing you might want to review this article

  21. That is not correct at all! As someone who does have knowledge of what happened, and who is connected with the top levels of GPG GPG did not hand off Telexfree because Telexfree was growing too fast.

  22. Making a mistake may seem like a small issue. However, the same issue brought the SEC, Secret Service, bank investigators, IRS and state AGs looking at Zeek Rewards.

    Just because we call it a “mistake in word choices” does’t negate the fact that regulations are in place, to protect the consumer. And if the average person is “making a mistake in their choice of words” then the regulators may find a pattern and investigate.

  23. it is available in many countries, not just the USA. please actually read and understand the comp plan. it is not an investment, it is a contract. a contract requires that the parties involved perform specific functions as per the agreement. in Telexfree, when I post an ad, I get paid approx. $1.50 per ad. the ads will sell the product (s) (they offer more than 1 product now and adding more to come), and the alexa rating of the company website will move up. this will cause more exposure to the product as well as the opportunity which will sustain the company indefinetly.

  24. Your comment raises red flags in and of itself. If you and others see “joining” TelexFree as “investment” then the US regulators as well as regulators in other countries may very well also see it as an “investment” and close it down as they did Zeek for selling “un-registered securities” aka PONZI!

    You are correct that life in and of itself is risky. However, fully understanding the risk, can lower the exposure.

  25. I personally know of 2 people doing TelexFREE and they have quadrupled their initial investment so far (in the thousands of dollars). I have just recently joined and I’m excited about it! – Everything is a risk in life. Just make sure the risks you take won’t harm your life and end up homeless.

    I have also found on joined this other MLM opportunity. Pretty similar to TelexFREE and it uses an iPad/Android Apps for advertising purposes. It is at PRE-LAUNCH stage.. 21 days remaining… the time to get in is now. The big money makers get in at pre-launch and by the time the MLM blows up, you already lined up for the gold rush. Right now it is free to sign up and no money is required. Check it out!

  26. As with “all things new” there is always some scepticism. The fact that #TelexFREE has grown and spread fast, has without a doubt created a greater buzz, put smiles on faces, as well as raised some eyebrows.

    Time will tell.

  27. Can you please explain on how telexfree makes the revenues to pay their members? That is still not clear to me. Thanks

  28. If the company listens to their attorneys and consultants in the USA. And those attorneys and consultants are working together, then I expect that the company will figure out a marketing plan and compensation structure that will be seen as legit.

    However, that will not change anything that has happened in the past, and regulators could still look into the company for past regulatory concerns.

    And, if the regulators determine that the product is nothing more than a thinly layered cover for a pyramid or ponzi, then we still have issues.

    Only time will tell what will happen!

    Let’s just pray that corporate will listen and the consultants/attorney provide real solutions.

  29. A friend mentioned this. So i am checking this out. The first thing that raised a red flag for me was the “buying” an ad and placing it – all with a few clicks; thus Making a huge return. (Anyone please correct me if i am mistaken because i really have not looked closely into it).

    I dont see the point 😐

    IF they can make such GREAT returns for something that can easily automated, then why spend all the effort (and expense of course) to recruit people. There would be plenty of banks, investment banks, asset management firms, private equity firms, venture capital firms that would gladly hand out millions to such a great business model with spectacular returns – yet TelexFree resorts to “crowdfunding” of sorts.

    This was the question I made during a “Adsbroker” in spain. A company based in mexico (already made me suspicious), as to why they resorted to crowdfunding. Their answer was to be “independent” from banks and investors…. a flimsy excuse. In fact, their “business model” was…. yes: Internet advertisement.

    Ads Broker claimed they had proprietary SEO technology (while having a cheapo website) that would optimize ad campaigns they would “purchase” and lead to spectacular gains. Therefore people had the opportunity to “buy in” an advertising champaign – for a limited time.

    Speaking of “limited”. The maximum “investment” limitation was 20.000€. The reason was to “allow” others this “great” opportunity. But for me, it was another obvious red flag. After all, I could put 200.000 or more – make a killing and then take my earnings out – just in case – wink wink. But of course, doing so could do severe damage to the company and more so if a single investor were to “buy it all” – so to speak. But because “ad campaigns” were limited (in spain) to a certain extent it would be difficult to use a dozen or more individuals as mules for 20.000 “GI” (gran investor). Thus, making the investment small but the pool large, it would entice “investors” to re-invest their “earnings” rather than cash in their large gains in hopes of compounding their gains.

    Telexfree seems to be a bit more sophisticated scheme than the blunt ads broker. But the principle is the same. It seems the grossly overpriced VOIP and future online store is simply a more sophisticated mask. As in ads broker when questioned about the ads “contracts” they were always evasive. As with internal financials. In other words they did not offer anything, because they did not have anything.

    my guest sign in email is legit.

  30. Well let’s look at a couple of things you wrote just for clarity.

    1. Your definition is a little off. No where is “capital” used in the legal definition. Here is the SEC definition which is what will be used in the USA.
    A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors to create the false appearance that investors are profiting from a legitimate business.”

    And it could be argued that the 20% charged to all existing TeleFree reps is going towards maintaining the high payouts. And, there is no way to dispute the argument, unless an investigative body charges the company with something.

    2. Higher than normal returns is not the sign of a ponzi. However, higher than normal returns with low or no risk is the sign of a ponzi.

    3. In TeleFree like any company there are people making way more than others. Now it can be argued that those folks are working harder and deserve more, but to say everyone is paid the same is not correct.

    4. And not all ponzi or pyramids wind up with just the top folks earning all the money. Madoff as an example shows than the money can be distributed for years and to thousands of people, with no one complaining until the end with an outside event caused many of those who had earned billions and millions to call to liquidate.

    5. You place a disclaimer in your argument… “As long as they follow directions” This is the same disclaimer used by promoters of ponzi and pyramids for why people are not earning money. Heck it’s the same argument used for just about every sales business I know of.

    6. Zeek Rewards proved people can join a business, never put in a dime or personally recruit and earn profits.

    7. Depending on the type of financial obligation is what could determine if a company is running a ponzi/pyramid. Primierca, as an example, charges a onetime fee to launch your Insurance Agency, then the rep pays the state and federal fees and a small annual fee for their website. But it is only a few hundred dollars a year for just the Insurance Agency and not much more if the rep is securities licensed.

    And as for the rest of the companies you mentioned, their annual fees are less than $100, TeleFree is 20% of the annual income earned. More like a franchise without the franchise license. Which in most states might be seen as violating both the Franchize and Business Opportunity laws in place.

    And by the way EVERY MLM you mentioned are created so EVERYONE has the ability to earn money off both their personal efforts and the efforts of anyone in their personal sales organizations.

    10. I did not slam TeleFree, but I did raise some red flags, based on the evidence and the facts at hand. :)

  31. Personally – all i can say is that a Ponzi Scheme, by definition – “…is a fraudulent investment operation that pays returns to its investors from existing capital or
    new capital paid by new investors, rather than from profit earned by the
    individual or organization running the operation. Operators of Ponzi
    schemes usually entice new investors by offering higher returns than
    other investments, in the form of short-term returns that are either
    abnormally high or unusually consistent.”

    In TelexFREE, no one gains a higher payback than anyone else. Each person involved is paid the same way based on the package they contract for, and anyone involved in marketing the software is only contracted for a year. Also, Pyramids and Ponzi Schemes always wind up with the very top levels of the organization making 90% of the money, and the vast majority wind up with nothing at all – only a loss due to expenses from buying books, tapes, going to trainings, etc. There is not one person involved in TelexFREE that will not make money – so long as they follow directions in advertising the software package. Also, it is possible to profit in TelexFREE without sponsoring anyone.

    Is there a financial obligation required to work the business? Absolutely. Same as any insurance agency, hosted travel agency, franchised chain restaurant and franchised chain hotel. Same as Amway, Shaklee, Mary Kay, Avon, BeachBody, Herbalife, Melaleuca, etc., etc., etc. They all also require money up front for the opportunity to be affiliated with the parent company. But how many of the MLM’s that I listed are set up to make sure that every single person involved will make a profit each year? None of them. TelexFREE is, and that is why I am involved with them and not the businesses listed above.

    Am I a biased observer? Of course. But all I can say is that I get paid each and every week without fail, and I have absolutely no one involved in TelexFREE other than myself, and even working this completely alone I am still making a few thousand extra each month – which comes in very handy. I make more per hour with TelexFREE than any job I have ever had. So, the company has done nothing but live up to its relationship with me. I am very happy with TelexFREE.

    Why people such as yourself feel it is appropriate to slam a company just because you feel like is really disappointing. I find TelexFREE to be upstanding and honest. They have been 100% staright with me. At least they don’t operate a website pimping Asian Women Dating websites like some people here.

  32. Are still interested and have questios on how to join Telexfree?
    Send me an email to with the subject:I want to join Telexfree.
    Include your location,telephone contact and skype id…….
    Please email me with any question you may have!!!!
    I’ve been in this company for 6 months now and I have nothing to complain about, accept the fact that I should’ve started earlier
    when a friend advice me to join in!!!! May God be with you all!!!!

  33. Mr Manabaseis, my name is halim. I’m interested to discuss with you regarding this matter in personal access line. can you send me your email address to or you share your facebook with me. Highly appreciate.

  34. Hello, I do not in other countries, but here in the USA Telexfree operating legally, have the respective permits, also last week launched a new program My financial advantage in the coming weeks and present its new product: telex mobile, so we’re doing things correctly and bringing confidence to developers. As in any business there are people who are too excited and start talking something else, which does not mean that the business really is so, each person is responsible for his words. Telexfree is here to stay for a long time and company executives have begun to make changes and improvements to the business and ensure that all promoters win money, plus the opportunity to share it with many more people who want to eventually get financial freedom and thus contribute to the U.S. economy

  35. Hola, no se en otros paises, pero aqui en USA Telexfree esta operando legalmente, tiene los respectivos permisos, ademas la semana pasada lanzo un nuevo programa: My financial advantage y en las proximas semanas presentara su nuevo producto: telex mobile, asi que estam haciendo las cosas en forma correcta y dandonos confianza a los promotores. Como en todo negocio hay personas que se emocionan demasiado y empiezan a hablar algo demas, lo cual no significa que el negocio realmente sea asi, cada persona es responsable de sus palabras. Telexfree ha llegado para quedarse por mucho tiempo y los ejecutivos de la empresa han empezado a realizar cambios y mejoras para asegurar el negocio y que todos los promotores ganemos dinero, ademas la oportunidad de compartir el mismo con muchas mas personas que quieran con el tiempo obtener su libertad financiera y asi aportar con la economia de USA.


  37. Excelente información, también asistí a una capacitación on-line totalmente gratis que me gusto mucho en – me despejaron todas las dudas y me ayudaron bastante… es bueno encontrar paginas con buena información sobre todo este tema de TelexFREE y lo mejor en español

  38. Troy, feel free to post the analysis I sent to you regarding TelexFree! As you noted, many U.S. reps are making statements that will get TelexFree into serious legal trouble. More importantly, they are recruiting people in other parts of the world, i.e., Africa, where the company is NOT legally operating and where the people in those markets are making the same types of problematic statements and claims!