Canadian TV stars such as Marilyn Denis, Mike Holmes, and Ron MacLean have long wondered who was behind deceptive online ads and websites that falsely claimed they endorse products like skin cream, CBD oil, and erectile dysfunction pills.
Denis attracted national attention last fall when she warned people about ads that falsely stated she was leaving her daytime show and had endorsed a skin cream. Holmes’ representatives went so far as to send a cease-and-desist letter to try to stop misleading ads from using his image to sell ED pills.
But they never knew who was behind the ads. Now, thanks to documents and other information unearthed as part of a BuzzFeed News investigation, Dennis, Holmes, MacLean, and other celebrities around the world have an answer.
On Wednesday, BuzzFeed News revealed that Ads Inc., a marketing agency in San Diego, ran a massive scam for years that involved placing false celebrity ads on Facebook to convince people to pay for a “free trial.” In reality, the celebrities had nothing to do with the products. And consumers who thought they were paying a small, onetime shipping fee later discovered they were subscribed to an expensive monthly subscription.
Subscription traps, also known as free trial scams, have caused more than $1.3 billion in US consumer losses since 2006, according to the Federal Trade Commission.
Ads Inc.’s operation placed more than $50 million worth of ads on Facebook, making it one of the largest subscription trap scams ever exposed. Documents obtained by BuzzFeed News included hundreds of examples of fake ads and associated webpages, providing evidence of the celebrities who were exploited by the company and its partners to sell products.
Canadian-focused ads used MacLean, former CBC News anchor Peter Mansbridge, HGTV host Bryan Baeumler, and hockey great Wayne Gretzky to pitch erectile dysfunction pills. The Facebook ads frequently led to a webpage designed to look like an article on the CBC News website, though at least one Gretzky article masqueraded as GQ magazine.
In the case of Denis, BuzzFeed News obtained internal Ads Inc. Slack chats that show executives and employees discussing the performance of ads featuring her. The chats also reveal that an employee based in Canada was helping Ads Inc. optimize its pitch for the country.
In August 2018 Asher Burke, the founder and CEO of Ads Inc., was contacted by an employee who told him that they had come up with a new combination of ad, product, and celebrity that was performing well in Canada.
“It’s this Canadian women [sic], Marilyn Denis, she is fucking fire lol, had never heard of her before,” wrote the employee. He then praised an Ads Inc. employee based in the Toronto area for helping the team come up with Canadian “angles” that caused people to sign up.
“Scamin’ her own peeps god bless her ’eh?” Burke replied.
These messages were sent just a few weeks after Denis first began warning people about misleading ads and websites featuring her name and image.
An Ads Inc. employee who spoke to BuzzFeed News confirmed the company used Canadian TV stars to market subscription traps. They cited hockey commentators Don Cherry and MacLean as two lucrative targets, along with Mansbridge and home renovation TV star Mike Holmes.
“Mike Holmes got really crazy on the legal side with us,” they said.
John Doran, general counsel for the Holmes Group, confirmed to BuzzFeed News that he sent a cease-and-desist letter in April to two email addresses listed in the domain registration information for a website he connected to unauthorized Holmes ads.
“It was difficult for me to nail down any sort of particular address” or the name of the company behind the ads and offer, he said.
That letter apparently made its way back to Ads Inc. The employee said it and others were told to stop running ads featuring Holmes, and to pause targeting Canadians.
Seth Atkins, the senior vice president for the Holmes Group, told BuzzFeed News that his organization hadn't known who was behind the ads, or if the legal letter had worked.
“I’m very glad to hear that we had an impact on these guys,” he said.
“They clearly have no regard to real people. They put out one ad claiming that Mike Holmes Jr. was shocked that his dad was getting arrested. We don't need that kind of thing in our daily life.”
The employee said Ads Inc. was “the best in the world” at coming up with new combinations of celebrities, false claims, and products to drive sales. This resulted in a flowering of copycat celebrity ads across platforms — which means Ads Inc. wasn’t the only company using Canadian celebrities for subscription traps.
“[Other black hat marketers] look at our ads and they run them. We’re a little drop in the ocean but we created this whole ecosystem,” they said. (Additional examples of Canadian ads were documented by Canadland.)
Along with targeting Canadians, ads and webpages obtained by BuzzFeed News were used to drive sales in Germany, Denmark, Malaysia, Singapore, the United Kingdom, Australia, the United Arab Emirates, France, Belgium, and the Netherlands, among other countries.
The use of celebrities is key to the scam, according to Steve Baker, a former investigator for the FTC who runs a website and newsletter that reports on consumer fraud.
“I talked to several of the victims of these, and they said it was the presence of the celebrity which convinced them that this was for real,” he previously told BuzzFeed News.
A representative for Marilyn Denis declined to comment.
Correction: Ron MacLean's name was misspelled in an earlier version of this post.