along with the change in Willms’s finances came a parallel change in his lifestyle. Although he had never been popular in school, one associate told me that he “bought friends” when his diet-product sites rocketed to success. Some he installed as executives at Just Think Media; others formed a sort of entourage around him, benefiting from his largesse. “There was no hiding the fact that Jesse literally had millions of dollars,” recalled a former schoolmate. “Everyone wanted to be his friend. It was crazy, like the guy was a celebrity.”
Though some former employees say Willms remained socially odd—fidgety, averse to eye contact, and difficult to hold a conversation with—he rapidly established a reputation as a hard partier who liked to throw his money around. At his newly built manse, complete with an entrance fountain and multiple kitchens, Willms kept the refrigerators abundantly stocked with alcohol and snacks for his get-togethers. And at Edmonton-area bars, Willms cultivated the image of a high roller. “Jesse always gets VIP service at any bar he goes to,” one acquaintance told me. “Even if it’s a bar where you wouldn’t even know they had VIP service.” Another recalled seeing Willms order 50 cocktails at a restaurant and then leave most of them untouched on the bar. “It’s almost like the show Entourage, and Jesse was Vinny,” he said. “He’d buy 100 shots at once and pass them around to anyone who walked by.”
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Willms also frequently took the revelry on the road. Although many pictures of him have disappeared from Facebook since the FTC lawsuit, the hundreds that remain show Willms and his friends taking at least a dozen trips to Las Vegas and Los Angeles on chartered planes during Just Think Media’s most lucrative years. The images capture his crew of early-20‑something men and their predominantly blond female companions living impressively large: throwing cash into the air at clubs; flying in fighter jets; lounging in the $40,000-a-night Hugh Hefner Sky Villa at the Palms in Las Vegas. One photo features Willms at the Hollywood Walk of Fame, kneeling beside the star dedicated to Donald Trump.
Yet his former employees say the carousing never impaired Willms’s focus at work. “Jesse was always there in the morning, punctual like everyone else,” one former employee told me. “He would take a jet out to Vegas on Friday after work, but then he would be back on Monday morning, not hungover. If you didn’t hear rumors about it, you wouldn’t even know.” In fact, notwithstanding the enormous sums flowing through Willms’s accounts, his onetime employees recall Just Think Media’s office as a typical small-business environment. Willms was a friendly and organized boss; according to the Canadian Business story, he often handed out to-do lists in the morning and expected to see them returned, completed, at the end of the day. He paid well, but expected performance. When one employee began showing up late or hungover—sometimes because he had been “out with the boss last night,” another employee told me—Willms fired him.
Indeed, the office milieu at Just Think Media was so conventional that few employees said they suspected anything untoward. Actual products seldom appeared at the office; his employees generally just designed Web sites and handled customer service. Sure, a lot of people seemed to be complaining, but didn’t every company get complaints? And wasn’t Willms some kind of business whiz? “Nobody really questioned him,” one former staffer said. “You just thought he was well connected, and did what he said.”
If anyone complained about hidden charges and demanded a refund, Willms’s customer-service workers explained that it was the consumer’s responsibility to know what he was buying. In early 2010, for instance, Willms debuted a site called SwipeBids, under the umbrella of a company he called Terra Marketing Group, to host “penny auctions” (in which buyers paid a small fee in exchange for each bid they placed). The page gave the
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strong impression that one could test out the service with 300 free bids, yet once customers signed up, Willms immediately charged them a nonrefundable $150 fee, the existence of which was often only revealed on a separate page, in a small font, according to the FTC. When complaints started pouring in, one of Willms’s Web designers was incredulous. “On the page where they sign up, it was so clear,” he told me. “Why did everyone expect to come to that site and get everything for free?”
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Eventually, though, the ire of thousands of customers began to redound to Willms himself. By 2010, his various offers had drawn so many complaints that any Internet search for his name threatened to turn up nothing but negative results. Willms handled this as, by now, you might expect he would: by hiring a search-engine-optimization company to create a bewildering array of interlinked Web sites with domain names like jessewillmsethics.com and jessewillmscharity.com in order to stack his search results with favorable material.
For a man who was accused of running an epic series of online scams, Willms has had a remarkably forthcoming presence on the Web. Over the course of hundreds of blog posts—many no longer online—he opened up about everything from his zeal for philanthropy (“Charity Is My Driving Force”) to his deep feelings on Mother’s Day. Several entries caught Willms reflecting on how to be a good date; be attentive, he recommended, and always pick up the check. One post showed three photos of him chatting with George W. Bush at what he called a “networking event” and featured Willms reflecting on the humanitarian lessons he had learned from the former president. Yet another captured Willms reflecting on, well, reflecting. “Reflection doesn’t have to be about charity and personal development,” he advised would-be reflectors. “You can reflect on any subject you want to.” The overwhelming impression one receives from these posts is of a man whose passion for ethical business principles is matched only by his burning desire to sponsor needy dolphins.
“Usually with people involved in counterfeiting and piracy, you see people acting very cautiously, very suspiciously. The opposite was true with Jesse.”
Naturally, little of this information appears to be genuine; Willms probably didn’t even write most of it. His charitable giving was legitimate (one former employee told me Willms began donating money “to not look like the bad guy all the time”), but many of his posts on other topics veered into the surreal. When the writers ran out of variations on words like integrity and principles, for example, they started pages about shopping, history, even dinosaurs. (One site speaks of Willms’s “deep and unfading love of calico cats.”) I spent hours one morning trying to catalogue them all, but they never seemed to end; I gave up counting at about 60 individual sites. Credibility did not appear to be a prerequisite in creating these pages, so long as they made searchers wade through reams of Google results before arriving at anything real. And Willms was not afraid to create trouble for those who did break through this wall: several times, when he spotted an unflattering story about him or his ventures, he had his lawyers send threatening letters demanding that it be removed.
Despite the external criticism, Willms’s customer policies didn’t seem to change much. Instead, he doubled down on ham-handed image management: his self-promoting sites; his sudden splashes into philanthropy; his new predilection for issuing questionable press releases, including one that proudly celebrated the fact that his main personal Web page, jessewillms.com, was now “the 15,773th most popular site in all of Canada.” But while some guileless consumers bought this act, one important group definitively did not: investigators at the Federal Trade Commission.
by late 2009, FTC officials could see that affiliate-pushed “negative option” scams—in which customers sign up for “free” trials and then find themselves trapped in expensive continuity plans—were becoming a pandemic. As the federal government’s primary consumer-protection arm, the FTC was the agency expected to do something to address the issue, yet it faced a major problem of scale: it was one Wyatt Earp among thousands of Internet swindlers, many of whom had disguised their tracks with shell corporations. So the agency tapped its consumer-complaints database to target a few big players. Near the top, with more than 2,500 Better Business Bureau complaints, were Willms’s companies.
The case soon fell to Kathryn Decker, an energetic lawyer who has spent three decades with the FTC’s Northwest regional office, in Seattle. As had happened with the lawyers in the Microsoft suit, Decker watched in astonishment as a seemingly straightforward investigation of a 20-something mushroomed into the biggest case of her career—one that involved distributors all over the globe and hundreds of millions of dollars in transactions. Willms learned of the investigation early on and agreed to turn over his records, but it still took Decker and her staff a full year just to sort through his byzantine affairs. “People who would be added to the case would take a while to catch up, and then they’d say, ‘Okay, I need to take a break,’ ” Decker told me in her 28th-floor office, with the cobalt waters of Puget Sound spread out behind her. “There was that much to learn.”
The FTC investigators were also surprised to find that while they were pursuing a case of such ever-growing complexity—encompassing credit reports, anti-aging products, work-at-home schemes, and more—Willms plowed along undeterred with his embattled penny-auction sites. And his displays of wealth continued as well. In April 2011, for instance, mere days after an investigator from Canada’s Competition Bureau, working in collaboration with the FTC, raided his company’s trash in search of evidence, Willms threw a blowout 24th‑birthday party for himself at a casino resort near Edmonton. As Canadian Business reported, publicly posted photos of the event showed Willms arriving in a white limo wearing a dazzling red suit, popping champagne, and posing with a Shake Weight. “I think he enjoyed himself immensely,” Decker noted.
Yet for all Willms’s hijinks, Decker and her colleagues were never less than impressed with their subject’s cleverness. “He came across as very smart, savvy, ambitious, and hardworking,” Decker told me. Willms’s enterprise, the FTC’s investigation suggested, was less a product-delivery business than a highly sophisticated mechanism for gathering credit-card numbers. “This was not a legitimate business model, in which you try to get customers to keep ordering your product,” Decker said. “The product was never the point. The point was to get as many hits on each credit card as you could.”
Many other businesses had tried to run comparable schemes—at the same time, the FTC was pursuing similar cases against two more companies—but Willms’s operation, according to the FTC, was by far the largest, the craftiest, and the most tenacious. Take, for instance, the lengths to which Willms went to keep his beleaguered business plugging along. Once he began to run afoul of Visa’s and MasterCard’s risk-management systems because of the high number of refunded charges his sales were generating, Willms was in danger of losing his ability to conduct credit-card transactions. As a solution, he allegedly recruited five people (one was a dog groomer) to “run” shell companies for him, paying them each $3,000 a month to do little more than sign papers. Willms appeared to have kept these partners every bit as in the dark as his customers. When one of them, Adam Sechrist, started receiving stray complaints, he was told to reroute any grievances to a man named Enrique Fuentes. “Hey, is Enrique Fuentes an actual person?,” Sechrist asked in an e-mail to one of Willms’s associates. As far as the FTC can tell, the answer to that question is no. (All five of the shell-company signees were eventually sued alongside Willms in the FTC case and agreed to five- or six-figure settlements.)
By the spring of 2011, Decker and her team realized that Willms’s ventures were sprouting new tendrils so quickly that they couldn’t hope to keep up. “At a certain point you have to cut it off, or you’d be investigating him for the rest of your career,” she told me. That May, Decker filed the FTC’s suit against him. (Willms, I should note, has never been charged with any crime; the FTC’s authority is civil, not criminal.) The complaint accused Willms of nine separate infractions, from illegally charging consumers’ credit cards to deceiving customers about “risk free” offers and outside endorsements. His team of lawyers contested it all, even accusing shady affiliates of stealing customers’ credit-card numbers. In a cunning turnabout, his lawyers also argued that when Willms claimed a product had been “seen on” CNN or ABC, what he really meant was that it had been advertised on their Web sites.
But it’s hard to counter Willms’s attorneys when they point out that his terms were right there for consumers to peruse. Screen captures from the FTC’s files show that Willms often placed the details of his offers next to where customers entered their credit-card information. If people neglected to read up on what they were buying and simply clicked through—just as we all do every day, when Apple or Microsoft presents us with a new novel-length list of terms and conditions—was this Willms’s fault or the customers’? The FTC worked around this by arguing that what matters in deceptive marketing is the “net impression” consumers take away. “You cannot go through six different Web pages that say ‘Free, Free, Free, Free,’ and then get to the last one that still says ‘Free’ but adds in small print, ‘If you choose to continue having white teeth, you’re going to be charged X, Y, and Z,’ ” Decker told me. “Because it will not have gotten rid of the impression that it was free.”
“The product was never the point. The point was to get as many hits on each credit card as you could.”
In the end, Willms’s arguments won little sympathy in court. After initial settlement talks faltered, the FTC convinced U.S. District Court Judge Marsha Pechman that leaving Willms in business posed a sizable danger to consumers. So, in September 2011, Pechman froze his assets and banned him from selling anything with a negative-option feature, essentially incapacitating his business. Within half a year, Willms assented to a staggering $359 million settlement—representing, according to the FTC’s final accounting, the “total un-reimbursed consumer injury” he caused—and agreed never to use negative options, misrepresent his products, or mislead credit processors. As part of the deal, he also agreed to sell off his mansion, as well as a $30,000 fish tank, a $12,000 fur coat, and other possessions, although he did not admit to the FTC’s allegations or to any violations of the law.
The scam-wary American consumer might hope that this victory for the FTC would have put Willms out of business permanently and sent shock waves through the seedy back alleys of the Internet. It has done neither.
after reading through Jesse Willms’s online exploits, one perfectly reasonable reaction would be to cling ever tighter to the sites you trust—to vow never to stray from the seemingly safe paths laid out for us by Web gatekeepers like Google, Yahoo, and Microsoft. Since these companies have huge financial stakes in maintaining user faith, the thinking might go, they would surely never endanger that by doing business with potentially shady companies or affiliates. Right?
Well, no: the evidence shows that they, too, often work with unsavory advertisers—sometimes knowingly. In fact, the Harvard Business School professor Ben Edelman’s Web site houses a numbingly long list of cases in which trusted companies have sold ads for services they knew to be suspicious or fraudulent. Take Yahoo-owned Right Media: according to a 2009 analysis by Edelman, at least 35 percent of its inventory at the time consisted of deceptive ads, like pop-ups made to resemble Windows-operating-system prompts, and notifications that Internet users have “won” Walmart gift cards. (In response to this analysis, Right Media noted that it expected members to follow rigorous standards and pledged to remove improper ads “as quickly as possible.”)
Or consider Google, whose famous motto, “Don’t be evil,” has not prevented it from engaging in suspect practices for the sake of ad sales. (Lest we forget, Google exists primarily to sell advertising; in 2012, 95 percent of its $46 billion in revenue came from selling ads.) According to court documents, Willms paid Google at least $1.7 million to advertise his various sites. And while the tech behemoth has often claimed that it couldn’t possibly monitor all of its advertisers’ practices—and thus shouldn’t be held liable for them—recent events have called this argument into question. In August 2011, for example, Google agreed to a $500 million forfeiture after a government sting revealed the company’s willingness to work with online pharmacies that were illegally selling prescription drugs. The investigation found not only that Google was aware these advertisers were breaking the law, but that its employees helped offenders prepare ads for prescription-free drug sales (reportedly including human growth hormone and the abortion drug RU-486) that would skirt Google’s own regulations.
Google has also been accused of profiting from so-called typo-squatters (who set up sham sites with misspelled URLs like twittter.com) and wittingly selling ads to companies offering counterfeit products. On occasion, scamming advertisers are found to be operating on all three of the aforementioned Web heavyweights at the same time. In November 2011, for example, inspectors for the federal government’s Troubled Asset Relief Program shut down 125 alleged scams that had been using ads on Google, Yahoo, and Bing to defraud homeowners through supposed mortgage-modification services.
When someone like Edelman draws attention to this explosion of scam-linked advertising on the Web, the tech companies that carry those ads tend to throw up their hands and claim that the Web is so huge, no one could hope to monitor it all—an argument Edelman finds dubious. “This is potentially highly regulatable,” he told me. “Think about how much easier it is to track behavior that’s occurring on the Internet. But it’s easy to get ourselves tied up in a knot where Google will tell you, ‘Oh, there are so many different ads, it’s so hard to verify.’
“We put a man on the moon. If we put our minds to it, we can fix this stuff,” Edelman continued. “The problem is that a lot of the folks who can stop it don’t have much incentive to stop it.”
To Edelman, the main obstacle to better-regulated Web commerce is the judicial branch’s unwillingness to force online gatekeepers to change their practices. “The Internet is a Wild West in part because the courts have made it so,” he told me. As evidence, he pointed to Goddard v. Google, in which the plaintiff sued Google after she clicked on a search ad for free ringtones that led to an allegedly fraudulent site. A U.S. District Court judge dismissed the case. “In particular, he held Google not liable for deceptive ads that Google knew about and charged extra for,” Edelman said. “It’s absolutely outrageous. How can it be that Google knows the ad is deceptive, Google charges extra for it, and still somehow is not liable? If Jesse Willms is responsible for the bad things his contractors did, why is Google not responsible for the bad things its advertisers did?”
From individual affiliates up to those in the highest aeries of the tech ecosystem, few are ever held accountable for endemic fraud. “There’s a fine line between shutting down the Internet and policing it,” said the FTC’s Kathryn Decker. “We just try to hit that right balance and hit the big players, because we can’t go after everybody. That’s the truth of it.” At the very least, Edelman says, Web gatekeepers might pay special attention to when advertisers use the word free, since those claims are usually far from true, or keep better track of habitual offenders.
Yet even in the case of Jesse Willms, a man Google arguably has ample cause to be wary of, the company continues to run ads for his ventures today. When I contacted Google to ask about this last year, a spokesman would give me only a three-sentence statement claiming that the company has “zero tolerance for bad ads in our systems” and that it terminates these ads “as quickly as possible.” About its ongoing relationship with Willms—who has been accused of being one of the most prolific swindlers in the history of Internet marketing—Google had no comment. Discussing a specific advertiser, I was told, is a violation of company policy.
despite the publicized $359 million settlement with the FTC, Jesse Willms is doing just fine financially—and he has a new yellow Lamborghini to prove it. One reason for his quick return to prosperity is that he was never actually going to pay the advertised settlement amount; the financial judgment was suspended, as long as he surrendered his assets. In reality, Willms likely never had that much cash. Most of what he took in (that wasn’t spent in Vegas) went right back out to pay affiliates and distributors. After he settled his tax debts, Willms turned over a total of just $991,000 to the U.S. Treasury, according to the FTC’s enforcement division. “People like Jesse Willms, we’ve found, like to spend their money,” Decker told me. “That makes it very difficult to get enough money to make injured consumers whole.”
But the other reason for his continued prosperity is that he remains very good at making money on the Internet. Although Willms wrote in his one substantive e‑mail to me that the FTC suit “represents the biggest challenge I have ever had in my life”—one that made him contemplate “closing down my business and going back to school”—some of his acquaintances claim that Willms seemed barely perturbed as his second fortune looked likely to disappear. “Right when he got sued by the FTC, I went to a bar downtown, and he was there,” one former employee told me. “I was talking to him, and he seemed totally oblivious to the whole thing. It was bizarre.”
With the deftness that has characterized his entire business career, Willms left diet products behind and pivoted into information services. His major ventures today provide consumers with driving records, criminal records, and vehicle-history reports (just as Carfax does) across dozens of different pages, notably carhistory.us.org, dmv.us.org, vehiclehistory.com, and vehiclehistoryrecord.com. In fact, anyone looking for these services would have a hard time avoiding him: as of November, if you searched vehicle history on Google, Yahoo, or Bing, ads for Willms’s sites were among the first things you would see. By the looks of it, Willms offers a terrific deal—just $1 for a vehicle-history report, compared with $39.99 for one from Carfax. Because of this, Willms’s lawyer claims that the sites have received “several hundred thousand positive comments related to the product.”
When I looked into the sites, however, I also found hundreds of online reviews accusing them of being scams. In many of these reviews, customers complained of looking through their credit-card statements to find that, instead of being charged $1 for their report, they were charged for what turned out to be a “volume discount” subscription program that gave them 25 reports a month (you know, for those of us who like to query the history of our own cars nearly every day) for anywhere between $119.40 and $199.50, billed out over the course of a year. None of the customers seemed to have had any clue they’d signed up for this, and most reported difficulty getting their money back. “I got my refund ONLY after filing a complaint with the BBB,” one wrote. (Willms’s lawyer said that rates of refunded charges remain low, that the company has made “substantial efforts to improve customer satisfaction,” and that it “provides an immediate refund to any unsatisfied customers.”)
It’s hard to say whether this venture, so similar to his past ones, represents Jesse Willms’s essential genius or a stubborn dedication to signing up consumers for services of which they might be unaware. Perhaps both. Yet the more troubling implication of his current success is this: he probably isn’t doing anything illegal. The disclosures are all there, checked by his legal team. He is obeying the letter of the law, if not the spirit.
Or, put another way: You, as an online consumer, are on your own. You cannot trust the Web’s gatekeepers to protect you from suspicious operators, nor can you rely on an undermanned Federal Trade Commission to keep the Internet’s millions of businesses in line. At least for now, every time you give your credit-card number to an unfamiliar online company, you will have to make a leap of faith. This is the bargain we all have to accept as citizens of the Web.
And besides, there’s little point in getting worked up about something like Willms’s vehicle-history venture. By the time this story is published, the sites may well be gone. Once again, Willms will have moved on to another scheme. http://www.reviewengin.com/