How a worldwide subscription scam network was traced back to Montreal
Online users lured to websites through misleading advertising, Radio-Canada investigation finds
A Montreal-based marketing firm is at the heart of a scheme involving a massive network of streaming websites that has scammed thousands of internet users out small amounts totalling hundreds of millions of dollars with promises of free unlimited access to premium content that they do not offer, a Radio-Canada investigation has found.
The websites are run by a Barbados company called Hyuna International and offer users access to movies, books and music.
Users were lured to those sites through false promises and misleading advertising set up by subcontractors collecting commissions from AdCenter, a web marketing company run out of sleek and modern offices in downtown Montreal, the investigation by the disinformation-busting program Décrypteurs found.
The investigation revealed that both AdCenter and Hyuna International are linked to a Canadian businessman, Philip Keezer. This network uses a complicated web of hundreds of nearly identical websites and offshore shell companies to evade scrutiny, according to sources and experts cited in the report.
AdCenter is an affiliate marketing company, a legal and widespread practice. In this type of marketing, partners called affiliates promote goods and services and receive a commission every time a client they refer makes a purchase. Affiliates are not employees, but rather subcontractors.
Unlike other affiliate marketing companies, AdCenter has only one client: Hyuna International. Its affiliates are only paid when they convince someone to use their credit card information to sign up to one of Hyuna's sites.
Automatic billing begins after 5-day trial period
The misleading ads published by AdCenter's affiliates mostly appeared in Google results when people searched for free movies, live sports or e-books.
These sites contained bogus video players or download buttons that fooled users into thinking they were getting what they wanted, but instead led them to a signup page, the investigation found. All users had to do — or so they were made to think — was provide their credit card information to begin a free trial to access all the content they could ever want.
Buried in the fine print, though, is a catch: after the five-day trial period, if users forget to unsubscribe, they are automatically billed $49.95 US per month. Although most rescind their membership upon noticing that the site's library is actually filled with B movies and public domain works, some forget to cancel and are billed for months or even years, according to former employees.
They say these forgotten subscriptions are at the heart of the network's business model, which nets it tens of millions of dollars per year at the very least.
"Basically, [we were] just making money off people who don't notice," said one of more than 15 former employees Radio-Canada spoke to and who asked not to be identified because they fear getting sued by their former employer for talking to journalists.
"There's no way people are paying a monthly fee for that content. Just picture a really shitty Netflix ... but the movies are things you've never heard of, things you wouldn't even find at the back of a Blockbuster, like really weird things."
LinkedIn posts by multiple former executives within the network's various companies flaunt annual revenue of $100 million, a figure confirmed by a number of ex-employees.
"A lot of people just pay their credit card bills and don't really look at them," said Steve Baker, the Better Business Bureau's international investigations specialist. "Sometimes, it's months and months before they go: 'What the hell is this? I didn't even realize I've been paying this.'"
Baker, who authored a report on subscription scams in 2018, said many successful scams based on free trial offers rely on this very tactic.
The Montreal connection
Using DomainTools, a web analysis service, Décrypteurs was able to piece together a network of more than 1,100 websites created by Hyuna International.
According to data from Similarweb, a website that analyzes web traffic, these websites generated on average 32.4 million visits per month in 2020. That's close to 10 per cent of the 331 million visits to Disney+ in March 2021, according to Similarweb's estimations.
Thousands of complaints about these websites have been posted online over the years.
Décrypteurs examined 642 reviews posted on Trustpilot from 2015 to 2021 of five of Hyuna International's websites: Geeker, Lilplay, Tzarmedia, Iceboxfun and Funmanger.
Almost half contain variations of the words "scam," "fraud" or "steal," and the vast majority of people posting mention they received unwanted charges on their credit cards. More than 95 per cent of them gave a one-star review, the worst rating.
Without referring specifically to the thousands of negative reviews of Hyuna's streaming sites, Keezer decried the existence of anonymous complaint websites in a blog post about "complaint scams" on his personal website.
In it, he said that "the abundance of online channels through which consumers and competitors can vent their frustrations have created a breeding ground for fraud" and alleged that competitors and dissatisfied customers sometimes turn to these websites to publish "fraudulent accusations and outright smear campaigns."
Using open source investigation techniques, Décrypteurs found that the false advertisements sending users to these sites were created by subcontractors for AdCenter called affiliates. These affiliates, operating out of countries such as Bangladesh, Indonesia and Pakistan, make a commission every time they convince someone to sign up.
In an effort to recruit subscribers, these affiliates also create fake social media accounts to promote contests and events that aim to lure users to Hyuna's websites. For example, a fake celebrity profile will advertise a contest for a $10,000 jackpot, and users who try to participate will be told they need to register for a free trial on one of Hyuna's sites in order to be eligible.
In March, CBC reported that dozens of Indigenous artists and businesses in Canada and the U.S. had their identity stolen online by scammers. Décrypteurs found that AdCenter affiliates are behind at least two of these cases.
Company denies allegations
Over the past years, similar scams run by AdCenter affiliates have been reported in various countries, such as the U.S. and Norway. Celebrities such as talk show host Ellen Degeneres and basketball star Lebron James have been among those impersonated.
On paper, AdCenter prohibits its affiliates from using deceptive practices to drive traffic.
However, Décrypteurs found numerous instances where AdCenter employees tacitly encouraged affiliates to resort to these tactics.
In fact, our reporters were unable to find a single instance in which affiliates promoting Hyuna platforms did so by promoting films that were actually available in the company's multimedia library.
In one case, a company representative from Montreal gave affiliates a list of movies still playing in theatres, telling them to "push" these movies to "make sales" in a Facebook live video published in the summer of 2019 on AdCenter's page.
In another, an affiliate manager from Indonesia published a Facebook post telling affiliates to promise users they could watch live pro sports events by signing up to Hyuna's sites — and even included a link to a fake video player and a bogus streaming site template they could use to dupe them.
Keezer and the various companies linked to him did not answer interview requests from Décrypteurs.
A lawyer representing Action Media, another corporate name for AdCenter, called the allegations in the Décrypteurs story "false and bluntly defamatory."
What the law says
Experts told Décrypteurs that Canada's Competition Bureau is well-equipped to investigate the companies linked to this scheme on the basis of the Competition Act, which prohibits false and misleading advertising.
"The law says that merchants are not allowed to make false or misleading representations. So if you're lured by your favourite superhero movie after being told you can watch it by signing up, and that in the end, all that's given to you is a ton of movies that have nothing to do with what was promised, I think that that is suspicious," said Sylvie De Bellefeuille, a Quebec-based lawyer for consumer advocacy group Option Consommateur.
Although affiliate marketing is a common and legal practice online, it can sometimes be employed by merchants looking to dissociate themselves from misleading ads.
However, a spokesperson for the Competition Bureau, which declined to comment on this specific case, told Décrypteurs that companies are ultimately responsible for their marketing campaigns.
With files from Roberto Rocha