For those of you that hadn’t heard of them. TelexFree is a “Voice over Internet Protocol (VoIP) telephone service” company that was becoming very popular here in the Dominican Republic.  The interesting part about this company is that the people recruited for sale weren’t so much required to try to get people to sign up for the service as much as trying to get people to buy into a membership so that they could recruit more people.

Sound a little fishy, yep, the FBI thought so too. In fact you can now go to thier website and fill out a form to complain if you were one of the many people who bought into this “alleged”scam. You can view the FBI page here. and fill out the form here

Why would people pay a membership to work?

Good question. Each time I was approached about this I asked the same question. The basic idea is that you pay about $1500 USD to become a member and after that  you spend a few minutes each day doing some menial internet promotion which basically consisted of cutting and pasting spammy internet ads into internet classified site which were provided by TelexFree and saturated with everyone else TelexFree ads and you would get paid $100 per week. #-4 months of this and you will have earned you money back and it is just easy money from there. Once again sounds a little fishy huh?

I spend a lot of time going around talking to people. For a while I lived in an area where there were promoters hitting the area pretty hard. People were strongly encouraged to take out loans if they couldn’t afford to buy into this scheme and unfortunately many, many people gave in an did it. Most of them had little or no internet experience, many didn’t even have a computer they would have to rent one at an internet cafe, and had no clue as to what they were getting into, all their friends were taking advantage of this great new job opportunity so “why not me”.

So who was hurt?

While $1500 stings, it isn’t going to permanently damage most people in the more industrialized countries. However the Dominican Republic is not one of those richer countries. Many families live on just a few hundred dollars a month and instead of having a great new source of income, they now need to pay off a loan when they can barely afford to feed their families.
So, the update? At this point the principals of TelexFree are facing criminal and civil fraud charges for allegedly running a billion dollar Ponzi scheme. Even if this ever come to completion the people that were really hurt by this will likely never see any of that money again but will be spending years to pay it back to the loan companies. At the time the FBI raided their offices in Marlborough the company allegedly owned more that $1 Billion to it’s members and were in the midst of setting up a new pay scheduled that was making it even harder for the “members” to ever see any of their money back. Now with the company in bankruptcy, there is even less chance for them to get the promised money.

Unfortunately, people in developing countries are even more susceptible to this type of scam than in the more developed countries. Many are desperate to make enough to survive and willing to use what ever resources they have if someone can convince them there is an easy way to make money. That coupled with the misconception that anyone with a business can get rich on the internet makes the Dominican Republic and easy target for scammers.