Is 5Linx a Pyramid Scheme? Facts Behind Tainted Reputation

You visited your friend, Gertrude, who is in the middle of an emotional breakdown. You learned that she is having problems with her loans and managing her credit scores after being a victim of an identity thief. You, being a “compassionate” friend you are, offered her the 5Linx Chroma Credit to help her with her credit scores. You also suggested her to get a subscription of 5Linx ID Guard saying that it would prevent cases of identity theft from happening again. Gertrude, after minutes of being consoled by a good friend like you, got herself back and you turned on the television to watch something. The reception is awful! So, you suggested a subscription of 5Linx Cable TV to Gertrude as both of you are drinking the 5Linx MontaVida tea you sold to her last week. Then you said, “Y’know whut, Durlin’, you dun’t neyd to get thowz loans! Just do whut ah do sellin’ 5Linx!” Then, your gullible friend (thankfully) started to use her brain for the first time and asked you an intelligent question saying, “But isn’t 5Linx a scam? I mean, is 5Linx a pyramid scheme?”

Gertrude’s college degree is finally manifesting.

The Basics

  • Company: 5Linx
  • Founders: Craig Jerabek, Jeb Tyler, and Jason Guck
  • CEO: Nelson Gerard
  • Products: Personal and Business Products
  • Website: 5linx.com
  • Cost to Join: $249

The world of multi-level marketing (MLM) imposes great challenges to various companies gambling in this game. With lots of other companies and their minions saturating the market and offering the products they are specialized in, you might find yourself in the middle of a great competition. Should you invest in beauty products? Weight management products? Candles? CBD? Apparels? What kind of MLM opportunity are you going to focus on? Well, 5Linx decided to get in a very different way. Why choose one when you can offer everything?

5Linx offers a variety of products from personal product items to business products. This wouldn’t surprise me if 5Linx would start selling hippopotamus. Nevertheless, the company became well-known not just for the products and services it is offering.

5Linx, founded by Craig Jerabek, Jeb Tyler, and Jason Guck in 2001, headquartered in Rochester, New York. It played the game of MLM industry just like any other companies using representatives to market their products and giving them commissions based on the numbers of products sold and by recruiting more representatives. The company even received recognitions like a spot in 2006 to 2009 Inc. 500’s list of fastest growing companies and 2009 Rochester Top 100 list as the 2nd fastest growing company in the region.

Until in 2017, 5Linx made a noise when the three founders of the company were indicted on multiple federal fraud charges, including wire fraud and money laundering.

The Founders of 5Linx: Craig Jerabek, Jeb Tyler, and Jason Guck

According to the affidavit of FBI Special Agent Kristin Gibson, around 2009 to 2015, the trio made various contractor accounts controlled by them to conceal their identity and motives from employees and the investors. One of those accounts that made a mark was the “It’s About Time” (IAT). It is also said that one of the founders, Tyler, instructed an information technology officer to get into the “normal compensation program” by overriding it. This gave way for the accounts, specifically IAT, to receive compensations and bonuses whenever a 5Linx product or service was sold. In 2010, it showed that IAT account was one of the 5Linx’s top paid representatives with an estimated $1 million earning. Hmm… so, does it make the company a scam? Well… a little bit more reading.

In 2016, 5L Holdings, LLC was established and acquired the assets of 5Linx Enterprises and in September of the said year, Nelson Gerard was hailed as the new Chairman after buying the majority stock of 5L Holdings, LLC.

The company is currently being run by Gerard and a new set of management. The incident brought a tainted reputation to the company. The new management, on the other hand, makes its defense stressing that the crime was committed by 5Linx’s founders and previous owners and not the company itself. Nevertheless, the incident still cages the entire company’s name in a rusty standing.

Cornucopia of Products

Unlike most MLM companies focusing on marketing particular products and services, 5Linx offers a wide variety of products and, especially, services. If Walmart and Amazon were people and had offspring, it would probably be 5Linx. The company offers a great number of products from personal ones to business products. Here are some of the products of 5Linx.

  • Chroma Credit

If you are a shopaholic who wants to continue your craze but finds yourself in the middle of a problematic credit score, this is for you. It is a service that offers you credit repair for $89 a month. Chroma Credit improves your credit numbers and helps you to eliminate negative items in your report to make it presentable when you apply for various loans. Besides providing tools and ways to help you understand your score, Chroma Credit also offers free credit monitoring to avoid identity theft.

  • ID Guard

As if Chroma Credit is not enough, 5Linx also offers ID Guard that costs $14.95 a month. The ID Guard offers you protection against possibilities of identity theft. Not just that! It comes with $1 million identity theft insurance and antivirus, anti-spyware and firewall computer protection.

  • Internet, Fiber Video and cable TV

Slouching potatoes out there would love this. 5Linx offers high-speed internet that comes with Fiber TV with hundreds of channels in highest quality pictures and high definition. Basically, just a service that would make your husband stagnant on the sofa for a couple of hours watching football games featuring Italians with low pain-tolerance.

  • MontaVida Coffee and Tea

Like a glitch in a straight line, 5Linx offers you coffee and tea while in the middle of anti-virus and internet package offers. Why not? Isn’t it just nice to drink MontaVida while getting your cable TV fixed? Infused with MCT oil, which may assist with maintaining a healthy weight, MontaVida is also packed with nutritious Ramon Seeds. To be frank, I don’t know who Ramon is or what MCT is but MontaVida, just any other MLM products, claims that its products are “delicious.”

Also, the products’ prices range from $19.95 to $29.95 and they come in different flavors such as Columbia Supremo, French Vanilla, Hazelnut Crème, European Dark, Ethiopian Sidamo, Wild Burundi, and decaffeinated flavors. You might want to taste all of them while getting your credit score fixed or your hippopotamus being delivered. Nope, 5Linx doesn’t sell hippos.

  • Platinum Discount Network

If you are really trying to fix your finances or if you’re really just that aunt who wants discounts wherever you go, you might want to consider Platinum Discount Network. I know! Why didn’t we ever think that you can make money by selling an application that finds discounted items for you? Lucky for you, here it is. Platinum Discount Network would just make you the ultimate Auntie Lara Croft in finding discounts everywhere for $49.95 a month.

  • TextAlertz

Managing business could be stressful. But don’t be, TextAlertz is here! It is a mobile marketing solution that can help your business reduce costs and increase sales by allowing you to communicate instantly with your customers and employees. I know what you are thinking. Are 5Links representatives using this? They should be if they want to promote this service. Just clueless if it is free. You know MLMs. But, as for you, you could enjoy this for $30 to $90 a month depending on the plan you choose.

Whew! Those are just some of the products and services being offered by 5Linx and there are more of them hiding in its website, like stuff under your uncle’s bed, waiting to be found. And if you are going to ask for the review of these products, as far as I can tell, you would scarcely find complaints about the products. Probably for two reasons: the products are good or few people use them

Compensation Plan: Rewarding or Tormenting?

Admit it or not, despite the 5Linx’s new management’s efforts, the company is still suffering from the stigma made by its founders. Nonetheless, the company keeps on pushing to get itself out of the stained reputation by continuously providing opportunities in the MLM industry. With $249 (includes a startup kit, personal website, phone/email/chat support and various other training resources) to join the company as a representative, you would be able to start your journey collecting compensations and bonuses at 5Linx. With that, let us take a peek at the company’s compensation plan (and hope that there are no more imaginary accounts leeching on it).

PS: Brace yourselves, BTW. You would encounter a lot, like a LOT, of acronyms here. 5Linx really loves acronyms, TBH.

  • Quick Start Bonus

Just like It Works! offering you a bonus on your first 30 days, you would also be given the chance to earn a bonus at 5Linx in your first 30 days: the Quick Start Bonus. By meeting specific requirements, you would be eligible to $25 up to $1000. I know, right? Truly overwhelming! Just imagine yourself earning $1000 just for this bonus in your first month. That would surely be awesome! But, of course, not that fast. To be able to get the bonus, you should at least provide numbers of Customer Points (CP or the value assigned to a specific product or service counting towards position qualification for various bonuses. CPs vary depending on the products or services sold) and Independent Marketing Representatives (IMR or a recruited representative).

Representatives aiming for this bonus, then again, must accomplish these requirements for the first 30 days of enrollment. If not, the bonuses will be reduced to half if the requirements are instead met beyond 30 days up to the 60th day of the representative. This bonus looks promising if you would be able to bring it to reality. So, may I suggest, skip sleep and hunt the whole town for your recruits and customers. Good luck.

  • Earned Position Bonuses

5Linx also offers its representatives bonus by reaching specific ranks in specific numbers of days upon enrolling. The positions you should eye for are the Executive Trainer (ET which requires two Frontline Qualified IMRs or QIMRs who satisfy the minimum customer qualification requirement which is 6 CPs), Executive Director (ED who needs Organizational 100 CPs, four independent lines with a QIMR, and two independent lines with at least an ET), National Director (ND that requires 450 Organizational CPs, six independent lines with a QIMR and two independent lines with at least an ED), and Senior Vice President (SVP that requires at least 1,500 organizational CPs, 8 independent lines with a QIMR and two independent lines with at least an ND).

The good thing about this is that ET has no deadline which means that you can have the $100 bonus for the position regardless of how long it would take you to reach it. Unfortunately, ED, ND, and SVP only have 60 to 180 days to do it.

It’s really nice for 5Linx offering this bonus, only we’re not sure how realistic it is given the set of requirements. I mean, 180 days to produce your own ND and 1,500 CPs? Oh, 5Linx, I’m literally laughing.

  • Mentorship Bonus

This bonus is given when your recruit gets promoted. It depends on the position he or she is getting. The ET promotion would give you $25, ED with $50 and ND with $100. On the other hand, you might want to be both the enroller and sponsor of the recruit because if not, the bonus would be divided into two; 50 percent for the enroller and 50 percent for the sponsor.

  • Customer Acquisition Bonus

When you enroll IMRs and help them to be QIMR by attaining the 6 PC required in their first 30 days, you would be eligible for Customer Acquisition Bonus (CAB). The bonus you would receive depends on the position you have when the IMR turns into QIMR. To receive this bonus, you should at least be an ET and the enroller of the representative. Your uplines could also benefit from this bonus. However, as you know, there would also be generations of IMRs as the team grows. This also produces multiple positions in your upline. Say, if you are an ED, there could be multiple NDs in your upline. To determine which ND open-line-upline above you would receive the CAB from the QIMR, it would be the first ND of that level you would meet as you travel up your line. The same thing applies to the generational uplines, only it is paid to the second upline of a specified position level, or in this case, the second ND you would meet as you travel up your line.

CAB does look enticing as it promises you up to $150 once you reach the Diamond rank. Only, it is just an estimation of what you could get. To get that estimated amount, you need to be in open-line positions in various levels to get it. Again, this is just a possibility and this is why we have trust issues with MLM compensation plans.

  • Open-Line Bonus

Besides the fact that recruiting specific numbers of IMRs is one of the requirements in attaining specific positions, 5Linx’s compensation plan could also entice any representative to recruit more due to the bonuses highlighting the benefits of recruitment. Some of them are the CAB and Open-line Bonus (OB).

After benefiting from CAB, you could still earn from the QIMR under you. This is the role of OB. In this one, you get the bonus depending on your upline and open-line positions, the numbers of your QIMRs and based on your monthly production. To be eligible for this bonus, you should also have your Platinum Discount Network subscription. So, yeah, to get this you need to pay $49.95 a month. Sneaky!

  • Customer Milestone Bonus

This bonus is divided into three: 25, 50, and 100 Customer Clubs. To be simple, it counts the number of customers you have for the month. Again, it is the number of the active customers that count, not points. Since 5Linx offers services, besides products, those customers availing services requiring subscriptions must remain active. Also, you need to meet certain personal Commission Volume (CV) just to be eligible for the bonus. The bonus ranges from $200 to $500 a month.

  • Residual Commission on Personal, Referred and Team Sales

Residual commissions are paid on the residual customers under your downline based on the position you are holding. Since 5Linx is offering various products and services, the CV of these products and services vary.

Since it is possible for a representative to possess different positions due to open-lines, they could earn commissions in various positions. Nevertheless, it couldn’t be applied for multiple generations at the same position. Say, as an SVP, it is possible for you to be paid at the SVP and ND position, but not at the ND2, SVP2 or SVP3 generation.

Also, the start of pay for residual commissions depends on the products and services your team has sold. In services, the pay would begin 90 days after the customer’s activation. Some pays even start after 120 days depending on the service or product availed by the customers. So, you need to wait for a couple of days… Err… I mean months before getting this compensation.

  • Car Program

Whoa! You mean a car? Yes, a car. Depending on the position you would be able to reach and maintain, you would receive monthly car payment. This bonus starts from SVP to Double Platinum SVP and ranges from $200 to $1,200 a month.

Again, to be able to get this bonus, you should be able to maintain specific positions for 20 calendar days per month. If not, the car payment would be forfeited which could impose great problems to a representative especially if the car is named under him or her. Ouch!

  • Annual Leadership Profit Pool

This pool is distributed just to specific ranks starting from ND to Diamond position. There are various categories each rank can compete to get their shares. The shares also depend on the position of a representative. Say, in SVP rank, when someone manages to be on the top of IMR production, he or she could earn 20 shares. The shares, of course, decreased to nine for the second place SVP, and down to the minimum of two for the 10th place SVP. The annual leadership pool is paid out at the first International event each year.

To enjoy those bonuses, here are the succession of rank you must face.

  1. Qualified IMR
  2. Executive Trainer
  3. Executive Director
  4. National Director
  5. Senior Vice President
  6. Platinum SVP
  7. Double SVP
  8. Diamond SVP

Income Disclosure Statement: The Proof

Oookay. So you have already viewed the ways you could earn at 5Linx. And if you bothered deciphering the company’s compensation plan without reading the explanations I wrote (explanations I tried to relay in the simplest possible way ‘cause 5LINX’S COMPENSATION PLAN IS COMPLEX AS HELL – if there is a place deeper than hell, that is where it belongs), I bet your head is probably throbbing now. But, that’s the way MLMs daze their prospects. 

So after a hellish, truly hellish, trip on 5Linx’s compensation plan, let us move to its current income disclosure statement and decide whether its compensation plan works or not.

Okay. So that’s the thing: 5Linx’s income disclosure statement is not available in public. Squeeze the net all you want but all you would find is its 2015 report which is quite outdated by now. But, let’s see it if it shows pretty figures.

The Diamond rank, with 10 individuals who managed to enjoy it, shows an astounding amount of $722,461 as its highest possible annual income as its lowest hit $113,040. Not bad. But, then again, this is just an estimation of what these individuals earned. And don’t forget, only ten individuals got the grip of this position in 2015.

The fluctuation of low income numbers among Bronze Senior VP to Diamond rank is quite bothersome as well. Why did a Platinum Senior VP receive $1,523 as its estimated lowest annual income while the Golden Senior VP got $ 49,768? This is something.

The Trainer rank, on the other hand, recorded $36,281 as its highest annual income or roughly $3,023 a month. Unfortunately, despite the fact that the numbers of Trainers in that year was mentioned, we wouldn’t be able to tell how many individuals received such amounts given that the percentages of those who received the high and low incomes were not mentioned. How many Trainers reached this high income? How about who got the dry $22 that year? The answer? Concealed. Do you know why? Use your imagination and logical reasoning and you would be shocked with your realizations.

Despite that income disclosure statement is based on 5Linx’s 2015 data, it is still quite bothersome. And you just know what is worse than that; 5Linx’s lack of initiative to present its present financial information to the public, which, by the way, implies a lot of things.

Diving in: Is 5Linx a Pyramid Scheme?

Despite the allegations and scandals that it has faced, 5Linx is not a pyramid scheme. Really? Yes, Gertrude, really. We all hate how its founders messed things up for the entire company and its present reputation, and possibly for its future. Nevertheless, the company itself is a legit MLM, technically.

I know you have been ranting about the questionable terms and requirements that 5Linx has created just to earn its idealistic commissions and bonuses but all MLM companies do it. MLM is purely a business of molding bait to attract prey. Is it legal? Unfortunately, yes. Nevertheless, there is a fine line between a legal MLM and an illegal pyramid scheme.

As you know, pyramid schemes rely entirely on the flow of investment being given by unknowing recruits. These investments would then flow from the bottom to the top of the pyramid structure, with those at the top getting most of the commissions. Despite the investments of the recruits, no profit would be generated since there are no concrete products or even services being offered by the scheme. The scheme manages to continue through the continuous flow of recruits who are investing. However, this flow would soon exhaust leading to the crash of the structure.

MLM, on the other hand, runs through the income being generated by the products it sells. It also uses a pyramid structure for its organization and recruitment. This causes most of the earnings of those at the bottom of the system to be sucked away from them by those at the top. However, some companies use the alias of MLM to cover up their schemes. These dubious so-called MLM companies mostly focus on the recruitment of individuals and forcing them for monthly purchases of the companies’ own products, thus forcefully making them the customers.

So, is 5Linx a scam? Well…

Weighing Things: Pros and Cons

Pros

  1. It has a lot of products and services that you could offer to a wide range of customers. One moment you are selling coffee and the next thing you know, you are on the roof setting up the internet for your customer.
  2. With 5Linx offering a variety of products and services, you wouldn’t run out of customers.
  3. 5Linx offers a lot of bonuses! I mean, you do need to meet some requirements, but so what? Gertrude graduated college, so what’s impossible?

Cons

  1. 5Linx offers a variety of products. Sometimes, it is better for a company to focus on just one product or service and think of ways to improve them. That way, there is a greater chance for the company to be recognized in delivering one particular quality product.
  2. 5Linx’s compensation plan is purely sugar-coated, dipped in a tub of juice of complexity, and splashed with concoction of confusion and deception. I mean, it is more possible to unearth a gold bar in your backyard than to meet all the requirements set in its compensation plan.
  3. Though it is being run by a new management, 5Linx has a tainted reputation that could affect your sales.
  4. 5Linx isn’t showing the public its annual income disclosure statement. What is it hiding?
  5. 5Linx is an MLM. Whether it’s legal or not, MLM is MLM that uses unfair system of compensating individuals.

Conclusion: The Verdict

Sometimes, it is amazing how companies continue running despite all the scandalous moments they got themselves into. 5Linx isn’t the only company that experienced such a thing, there’s ViSalous and a lot more.

Finding the best opportunity to make ends meet is truly one of the greatest challenges an individual could face. MLM industry, despite its flashy promises and possibilities, isn’t the best way to invest your effort, diligence and time.

Thank you for reading this article and I hope that I guided you well in pondering some things not just about 5Linx itself but the entirety of the MLM industry. If you are still looking for better ways to earn than MLM, let us help you. We, here at Legendary Wallet, have been doing it since 2015 and guess what, no commission sharing and pestering people just to make sales! Click here and discover it!

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Santiago

Santi used to work as a private school teacher and a YouTube script writer. Through the recommendation of his friend, Kyle, he decided to make affiliate marketing his full-time job. Now, it helps him to earn more and to enjoy his work at home.

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