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Beware of CBD gummy ads exploiting household names to defraud consumers, experts warn

By Jackie Dunham

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    TORONTO (CTV Network) — From oils and creams to capsules and gummies, there appears to be countless online ads for cannabidiol (CBD) products, with many exploiting household names in an effort to defraud unsuspecting consumers.

In early May, Tricia was perusing Instagram when she saw an ad for a free bottle of CBD gummies that appeared to feature the name and image of CTV News Chief Anchor and Senior Editor Lisa LaFlamme.

LaFlamme does not represent nor endorse any CBD products, including gummies, or any other products or services.

“They made it sound like she was the CEO of the company,” Tricia told CTVNews.ca during a telephone interview from her home in Peterborough, Ont. “It made it sound like she was saying that they [the CBD gummies] had saved her life and so she decided to start up a company.”

When she clicked on the ad, Tricia, who requested that her full name not be used for privacy reasons, said she was taken to a website with the URL verdenaturalbest.com, which is no longer active. She then proceeded to order one bottle of CBD gummies for $39.95. She didn’t see an option to claim an additional bottle for free, but says she decided to order one anyway.

Tricia, who is in her 70s, said she’d been thinking about buying CBD gummies or oil for a while to ease symptoms from the progressive arthritis in her spine.

After she had given her credit card information and completed the checkout process, Tricia realized she had not received a summary of her order.

Instead, her account on the Verde Natural Best website only showed a confirmation of her order without any total for the amount she would be charged.

“That’s when the bell rang in my head, like ‘How stupid can I be to think that it was Lisa LaFlamme at the head of this company?’” Tricia said.

The next morning, when Tricia called the number listed on the website to cancel the order, she said the customer service representative told her that it was too late because the order had already been processed and shipped.

After several more days of calling, she eventually spoke to one representative who told her that she was being charged C$334 for six bottles of CBD gummies as part of a subscription, even though she thought she had only ordered one bottle.

Tricia said she asked about returning the items and the representative told her she would only receive a refund of 50 per cent of the total and she would be charged an additional 15 per cent “stock return fee.”

She said her credit card company told her they would have to wait two weeks before they could put a stop payment on the charge.

Finally, Tricia said she was able to obtain a full refund for the order after she called the customer service representative again and accused the company of using LaFlamme’s name and image without her consent to promote CBD products.

When CTVNews.ca reached out to the customer service line for Verde Natural Best, a representative answered who works for a distribution company called Natural Brands USA, which handles consumer inquiries for multiple companies.

The representative, who didn’t provide his name, said they’re not affiliated with the ads that feature celebrity endorsements.

When asked if the companies he represents send consumers more products than they ordered, as in Tricia’s case, he denied it.

“What she ordered is what she gets,” he said. “Maybe, actually, she did something wrong with placing the order in the website. That’s probably most of the reasons for those products to be added to the order.”

When the six bottles of CBD gummies arrived, Tricia said she didn’t even try them before sending them to the Toronto return address included with the shipment.

“I should have known better. I know better,” she said.

While Tricia said she should have recognized a potential scheme, she’s far from alone.

IMPERSONATING CELEBRITIES ON THE RISE

In Canada, there has been a marked increase in complaints about these types of schemes in recent years.

Steve Baker, a former investigator for the U.S. Federal Trade Commission (FTC) and an international investigations specialist for the Better Business Bureau (BBB), conducted a study on subscription traps and free trial scams for the BBB in 2018. In the study, he cites data from the Canadian Anti-Fraud Centre (CAFC) that showed a dramatic uptick in complaints about these types of scams.

According to the CAFC, they received 518 complaints from March 2016 to March 2017, up from just 54 complaints from 2011 to 2016. Of those 518 complaints, 474 people lost money, with a total loss of C$192,419 and an average loss of C$248.

More recently, the CAFC said they received 2,557 complaints in 2019 about broader merchandise scams, which include subscription traps and free trial scams, that resulted in more than $2,699,000 in losses. In 2020, the CAFC said there were 4,056 reports of merchandise scams resulting in more than $9,730,000 in losses.

In the U.S., over a 10-year period, Baker said there were more than US$1.3 billion in losses affecting more than a million victims in the U.S. due to such scams.

“There is a massive industry of deceptive free trial offers. I think almost anybody has run across them by now,” he told CTVNews.ca during an interview from St. Louis, Miss. “They simply use the names and supposed endorsements of celebrities without permission.”

In the past few years, household names, such as Tom Hanks, Ellen DeGeneres, Don Lemon, Katie Couric, Sandra Bullock, and Dr. Mehmet Oz among others, have spoken out to refute ads claiming they have endorsed certain products, including CBD products, keto and diet pills, and anti-aging creams.

Baker said they use celebrities or well-known journalists in the product ads because they know the public will be more likely to click on them.

“They realize that people really do put more trust in something that’s endorsed by a celebrity that they’re familiar with,” he explained. “They think, rightly, ‘The celebrity wouldn’t really endorse it unless it probably worked’ so that gives people a lot more confidence that it works.”

In a statement to CTVNews.ca, the CAFC said, “scammers try to impersonate all celebrities” in what they call a “merchandise continuity scam,” which is: “Any scam that involves a victim being signed up for a subscription resulting in multiple and subsequent monthly charges on their credit card after buying a product or service.”

The CAFC said such schemes typically involve email, an online pop-up, or ad that relates to a free gift or product. The consumer then fills out a survey or questionnaire and enters in their credit card details to pay for shipping for the free product.

“There are subsequent charges on the CC in the following months. Mostly related to prize, merchandise and service scams and often related to known company names or even celebrity names being used,” the CAFC said.

In general, the CAFC said the emails or ads don’t target a specific group, but try to scam anyone willing to click on the link and provide their credit card information.

‘THESE COMPANIES DON’T WANT TO BE FLAGGED’

That’s exactly the reason why Terry, who requested that only his first name be used, decided to order three bottles of CBD gummies for $39.95 in order to receive three free jars. He said he made the order after seeing an ad that featured a supposed study on the benefits of CBD.

The 68-year-old from Ottawa said the study in the fake ad cited Canadian news outlets, including CTV News, CBC News, The Globe and Mail, as well as the University of Toronto.

“I’ve never used these products. I’ve never had a desire to use them, but my arthritis hurts so badly,” he said during a telephone interview with CTVNews.ca.

“When I saw CTV and CBC, etc., etc. and the University of Toronto, I figured, you know what, these are major Canadian legitimate organizations. I felt that if you thought that this was a really effective product, why not try it?”

After Terry placed his order, however, he realized something was wrong when the email confirmation he received showed an invoice for US$294.56 or C$357.

Terry called the customer service number and learned that he had been signed up for a monthly subscription for a CBD oil and cream, which is why his charges were so high. He said he was told the company would not cancel the order because it had already been shipped.

He spent the next 16 days disputing the charges before his credit card company became involved. He said as soon as his credit card company launched an investigation, he received a full refund and confirmation that his account with the CBD company had been cancelled.

“It demonstrates that these companies don’t want to be flagged,” he said.

Although he complained, Terry said there could be other consumers out there who failed to check their invoice until it was too late or they paid off their credit cards without noticing the extra charges.

Terry said he never bothered to try the CBD gummies, oil, and cream he received in the mail and sent them back to the return P.O. box address located in Toronto.

CTVNews.ca reached out to a customer service line associated with Indigo Ultra Shop, which is where Terry says he purchased the CBD gummies, and was directed to the same distribution company, Natural Brands USA, as before with Verde Natural Brands.

This time, a customer service representative who would only give the name Ezzy said their company is not affiliated with any “artists” right now when he was asked about the ads. He said he would direct CTVNews.ca’s questions to the company’s head office, but there has not been a response as of the time of publication.

Baker said it can be difficult to track down who is behind some of these companies because the websites themselves can appear differently depending on how they’re accessed. He said if the URL is typed into a browser, it may appear legitimate without any deceptive claims, but if the same website is visited through a link in an email, text message, or social media post, the website may have different information on it.

What’s more, Baker said a lot of the time the websites will only be up for a few days before they’re taken down or changed.

“These folks are very clever. They’re extremely computer savvy and it’s something that makes it more difficult to go after,” he said. HOW TO PROTECT YOURSELF

While it may be difficult to obtain a refund or track down those responsible for these types of merchandise continuity scams, there are ways to protect yourself from becoming victim to them in the first place.

The BBB recommends:

Research the company online. See what other people are saying about the company’s free trials. Complaints from other customers can tip you off to “catches” that might come with the trial. Understand what happens after the free trial ends. Always read the terms of the offer before signing up. If there aren’t any terms or it’s difficult to understand what you’re agreeing to, don’t sign up and don’t provide your credit card information. Watch for the fine print. Be aware that promotions or free samples are often not “risk-free.” Look for any fine print that says you will keep getting products and you will be charged for them. Be skeptical. Be wary of any endorsements from a celebrity or well-known figure or organization. Scammers often fake these endorsements. Report losses to credit card companies. If you pay with a credit card, you can dispute fraudulent charges. Keep an eye on your monthly statements and notify your credit card company of any suspicious charges.

Baker stressed that he would discourage anyone from doing a free trial or signing up for a free product from any type of medical or nutraceutical company online.

For anyone who believes they have been the victim of an online scam, Baker recommends they alert their credit card company and contact local law enforcement so they can investigate.

In addition to reporting the fraud to local police, victims in Canada can also file a report with the CAFC online or by phone.

Please note: This content carries a strict local market embargo. If you share the same market as the contributor of this article, you may not use it on any platform.

Phil Hahn
phil.hahn@bellmedia.ca
416 508 6396

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