Steve Labriola, TelexFree's Director of Business Development, released two corporate marketing videos yesterday, addressing ongoing company operations and external scrutiny. The videos offered limited new details but provided insights into the firm's official response to mounting pressures regarding its business model.
Labriola discussed the SEC investigation in Massachusetts. He stated that TelexFree "sat down with authorities," answered all questions, and presented required documentation, claiming the company operated as an "open book." This suggests an active investigation by the SEC, rather than a collaborative dialogue. TelexFree's recent adjustments to its compensation plan and business practices appear to be anticipatory moves in response to this scrutiny.
This stance marks a shift from earlier company attitudes. Co-owner Carlos Costa, when faced with a Brazilian pyramid scheme lawsuit, previously declared "god used" him to create TelexFree, adding that "nobody will take it away" from him. Now, TelexFree is attempting to redefine itself as a "customer acquisition company."
Labriola announced 550,000 new US customers since March 9th. These customers supposedly joined after the company changed its compensation plan. They are expected to pay $49.90 per month for TelexFree's VOIP service.
The claim of half a million new customers raises questions. Competing services like Skype cost around $13 a month. It is unlikely that 550,000 individuals would suddenly pay nearly four times that amount for an arguably inferior product.
The company's compensation plan changes require affiliates to secure at least five VOIP accounts under their primary account. Affiliates must also personally recruit two other TelexFree affiliates, each of whom must also hold at least five VOIP accounts. TelexFree focuses on the sheer number of these accounts for statistical reporting, not on their genuine usage or acquisition. Affiliates are likely creating these accounts themselves to meet new compliance requirements, rather than acquiring actual paying customers.