Ads Gone Wild
Ads, Inc.
Craig Silverman at Buzzfeed News dropped an absolute scorcher of an exposé this week on a San Diego advertising firm unironically named Ads Inc. The company would use a vast network of cutout Facebook accounts to advertise “subscription trap” products via outrageous fake ads. They sold scammy products like CBD oil and skin cream, enticing older customers with “free” trial offers and locking them in to expensive monthly memberships that were difficult to cancel. Ads Inc and its founder Asher Burke were very good at this:
…since 2016, Ads Inc. and black hat marketers working with the company have spent more than $50 million placing ads on Facebook through thousands of rented accounts.
A brief explainer on how Facebook ads work: every person who has a Facebook account has a Facebook Ads account attached to it by default. They can, with a little effort, disable their Ads account, but no one does this, because why would they? The Ads account does not interact in any way with one’s normal Facebook social media account, so a third party could run advertisements on an Ads account without the owner being aware at all. Since Facebook is a “self-serve” ad platform, anyone can put a credit card on their advertising account and run ads, whether it’s promoting a post they’ve made or sending clicks to a website.
Ads Inc took advantage of this functional disconnect between the two accounts to convince people to give them remote access to their Facebook Ads accounts, which they then used to run ads for their products. They would pay the account owners a monthly fee and have them install a device in their home to allow access so the activity on the Facebook account appeared to come from the original account holder - the IP address would originate from their home network.
Why go to all this trouble? The products Ads Inc wanted to advertise were in violation of Facebook’s advertising terms. Facebook banned most natural supplements, and products with a “free trial” business model years ago. To avoid detection, they would “cloak” their websites, meaning that if people with certain characteristics - likely Facebook employees - visited their pages, they would see an innocuous blog, not an ad for CBD oil.
Then there were the ads - they targeted older, less Internet-savvy customers, and used shocking headlines to get clicks.
One ad featuring country music star Tim McGraw — and a false claim that he had been arrested — was placed on an Ads Inc.–created Facebook page called “Guitar Tabs” in August. […]
“We call it jailbait,” the Ads Inc. employee said. “Jailbait makes more money than anything. Just throw someone in jail.”
As the article notes, there have been many companies over the years who have run the same business model. What made Ads Inc unique was that they did it on such a massive scale and were so brazen about it. They developed multi-level marketing, or MLM, style recruitment networks to secure over a thousand zombie Facebook accounts to send their ads from. In a feat of true daring, they visited the warehouse of another scam company that had just been raided by the FTC and got their products out from government custody.
“Found some donk in vegas to rent Uhaul, doctored invoices to fake FTC into giving us our product, took product to new fulfillment center in vegas in time to ship out to all waiting customers,” he said.
I would hate to be the court-appointed receiver who had to explain to a judge why he’d allowed some donk in a U-Haul to make off with pallets of tooth whitener.
Though it wasn’t Ads Inc specifically, I feel the need to mention that Dr Oz and a woman from Shark Tank also got involved in tracking down the owner of another company running a similar business.
Dr. Oz also dedicated an episode to a different San Diego company that was using an image of the show’s host, Dr. Mehmet Oz, to sell weight loss supplements. The target was Tarr Inc., a company that later paid a $6.4 million fine after an FTC investigation.
Dr Oz, a charlatan who was once dragged in front of Congress and excoriated for lying to the public, was apparently upset that someone else was using junk science to get rich. This story has everything!
Facebook, after allowing journalists to once again police their platform, claims it has shut down the accounts Ads Inc was using to peddle their wares, and is taking legal action against the company. It seems likely the authorities will get involved at some point.
The story takes a bit of a poignant turn when it reveals that Asher Burke was killed in a helicopter crash in Kenya while on safari with friends earlier this year. One of his accomplices attempted to keep the business going, and renewed their focus on the illicit Facebook marketing schemes, but once the Buzzfeed piece was published he shut down the company.
These sorts of companies will continue to thrive on Facebook, a largely unregulated platform that refuses to reckon with its responsibility as a media giant and a highly effective advertising system. As good as they may think their fraud detection systems are, there’s simply too much money to be made by finding black hat ways around them.
2.1 Billion and Me
We’re on a marketing scam roll this week! A widespread network of telemarketers and online affiliates targeting seniors with genetic testing offers was charged by the Department of Justice last month. The group offered seniors free - and unnecessary - genetic tests to screen for cancer, and billed Medicare for them. The pitch seemed reasonable - get a free cancer screening, and Medicare pays for it. Who doesn’t want to know if they have cancer? They managed to rack up $2.1 billion in testing fees over a couple years. Insane. How does this work? Here’s a lawyer to explain it:
If you can get a saliva swab and a Medicare number from an unsuspecting senior and falsify a doctor’s order (or find a shady doctor to write one), there’s an easy four-figure sum to be had. […]
All a scammer must do is find a laboratory willing to split the profit from the testing once the DNA samples are in hand. With more and more labs opening, there are plenty of doors upon which to knock.
Great! I’m glad we’ve finally figured out a way to monetize saliva.
Genetic testing labs are sprouting up all over the country, in part because some health insurers now pay for genetic testing in certain circumstances. The Centers for Medicare and Medicaid Services, for example, now pays for what’s called next-generation sequencing for individuals with advanced cancer or a family history of certain types of cancer if the test is medically necessary and is ordered by a treating physician.
So we have a proliferation of genetic testing labs, hefty payouts from insurers for a procedure they’re hoping will save them money as preventative medicine, and a bunch of opportunists who want to cash in.
As with the Ads Inc story, these sorts of scam networks thrive because companies can pay commissions to “affiliate” marketers who then advertise the services via digital ads, or over the phone with telemarketing lists. Genetic testing administered by medical professionals is unlikely to be a banned type of product on digital ad platforms, and is allowed on Facebook and Google.
The business model makes sense. If you know you’re able to bill the government let’s say $50 for an unnecessary genetic screening, you can then pay a $20 commission to some stranger on the Internet who can place ads on Facebook, and you pocket the difference. It’s a good gig for everyone involved! The seniors, in this case, even think they’re getting something for it! Everyone is happy.
Seniors are the easiest targets for both online marketers and scammers, as we’ve seen. The Medicare system, particularly, is regularly targeted by unscrupulous doctors, hospitals, and shady personal trainers. I do not envy the fraud investigators at CMS.
Short Cons
NY Times - “Millions of dollars were paid out to Chinese consultants […] more than 100 relatives of the Communist Party’s ruling elite were hired for jobs at the bank, even though it had deemed many unqualified.”
The Fader - “If you've recently received a message from Shaggy who insists that you owe him money, the artist himself wants you to know it's not him, and he's not feeling very Boombastic about the situation.”
Another week in the books! As usual, send me any hot tips to scammerdarkly@gmail.com and tell all your friends.