May 17, 2019 4:41 pm
Updated: May 17, 2019 8:10 pm

Canadian weight loss payback scheme cheated them, clients allege

WATCH ABOVE: A weight loss scheme that promised customers refunds of up to 80 per cent of the cost of their program fees has shut down. The Weight Loss Grants organization, tied to a chain of diet clinics, said it was ending the program. As Sean O'Shea reports, the move follows a wave of complaints from customers who said they were misled and not repaid as promised.

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A Toronto-based weight loss payback scheme linked to the founder of the Ashley Madison spousal cheating website claims it is ceasing operation amid complaints from consumers that the organization didn’t pay them money they were promised.

Weight Loss Grants announced on Wednesday that it was terminating the program, citing a “public relations crisis.”

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Consumers have complained to Global News for weeks that the company failed to pay rebates for weight loss services as advertised, even when they lost the required amount of weight and submitted all the paperwork demanded by the organization.

READ MORE: A B.C. woman was promised money for losing weight, but getting the cash was even tougher

“I feel like I was bamboozled,” said Kari Sardella, of Toronto.

Sardella heard about Weight Loss Grants through an advertisement promising that if she qualified for the “program” and successfully reached her weight loss goal, she would receive back 20 per cent of the money she spent on professional services — including fitness training.

Under terms of her agreement, she thought she was owed about $900 but never got her money. Sardella said she was advised she did not submit a required thank-you letter to the company, but can prove she did.

The company said Sardella didn’t prove her weight loss at the right time.

“Applicants cannot weigh out prior to or past their deadline,” wrote David Stein, identifying himself as an adjudicator at Weight Loss Grants, in answer to questions by Global News about Sardella’s case.

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Kimberly Penfold, also of Toronto, was promised she would get back 80 per cent of the cost of weight loss counselling if she hit her goal, which she did. Penfold actually exceeded her goal and lost 23 pounds. Even so, Penfold said Weight Loss Grants has not paid her the $1,680 promised when she enrolled in the program.

In order to get the 80 per cent rebate, customers like Penfold were told they had to use a specific, preferred service provider, Dalewood Health and Wellness. It operates 32 offices in Ontario, Alberta, and British Columbia. The company is changing its name to Trillium Weight Loss.

Penfold enrolled with Dalewood in addition to paying for fitness services with another company, which she actually credits for helping her actually lose the weight.

According to the Better Business Bureau (BBB), which investigated multiple complaints about Weight Loss Grants, the two businesses shared an office and employees.

Dalewood is owned by an Ontario company called Revverie, Inc., according to the BBB. Two of the company’s directors include Darren Morgenstern, the founder of the cheating site Ashley Madison, and Morgenstern’s wife, Marissa Mayles Morgenstern. Dalewood has a “D” rating with the BBB.

WATCH: B.C. woman fights for weight loss grant money. Anne Drewa reports. (April 8)

Besides his connection with the controversial Ashley Madison website, in 2002 Darren Morgenstern and a numbered company paid $375,000 to settle charges from the U.S. Federal Trade Commission (FTC). The settlement came months after the FTC alleged Morgenstern and the company duped people into registering variations of their existing domain names.

Some participants in the Weight Loss Grants program said they believed the scheme was backed financially by the federal government.

“I believed it was a government grant,” said Penfold.

On its website, Weight Loss Grants wrote: “Accredited Service Providers are health care practitioners and organizations that specializing in providing safe, effective weight loss programs that have been sanctioned by a body of Health Canada and/or have been vigorously scrutinized by our organization.”

However, Health Canada told Global News it never endorsed the scheme in any way.

READ MORE: ‘Caution’ over Dr. Bernstein weight-loss advertising claims contested

“As there does not appear to be any health products being offered for sale or advertised as part of these programs, Health Canada would not be involved,” said Geoffroy Legault-Thivierge, a Health Canada spokesperson.

Weight Loss Grants also claimed to be a “research, information and funding organization founded in 2010 by health care practitioners and industry professionals. Up to $3 million in reimbursement grants is allocated each year to help people lose weight.”

Announcing it was ending the program, Weight Loss Grants said: “To date, we have provided over $733,000 in grant payments,” — a drastically lower figure than it promised.

There is no proof the organization dispersed any amount of money to clients because it is a private company.

Customers who contacted Global News said they had successfully completed their weight loss but had their claims rejected for insubstantial reasons. In some cases, clients were told their doctor’s signatures didn’t match, or were illegible. Clients said that Weight Loss Grants kept changing the rules on reimbursement after they began the program.

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“They are telling me my doctor’s notes were not clear. I fulfilled my obligation 100 per cent,” said Penfold.

In announcing it was shutting down, Weight Loss Grants wrote on its website: “It’s become a challenge for our team to effectively manage the amount of administration involved in verifying and auditing fraudulent grant claims.”

However, some clients said they are the ones being manipulated.

“It’s like yelling down a black hole with nobody listening,” said Donna Rutten of North Saanich, B.C.

Rutten registered with Weight Loss Grants and started her weight loss program in January 2018 and met her weight loss goal ahead of schedule by September 2018. Her doctor verified her weight loss – one of the requirements in order to qualify for a refund. Only after Global News got involved in her case did she finally receive a refund cheque of $1,920.

The BBB has given the Weight Loss Grants a “F” rating after receiving dozens of customer complaints.

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“There’s either a delayed process or an extended process to get the payout or they just haven’t been getting payout at all and then there’s also no communication or difficulty getting through Weight Loss Grants Program to get updates on their payments,” said Karla Davis, manager of community and public relations for the BBB chapter serving Mainland B.C.

Weight Loss Grants had business relationships with 254 “sponsors” or weight loss companies, in addition to Dalewood, according to its website.

Erin Power, who described herself on Instagram as a “waist loss” expert, was one. She touted the Weight Loss Grants program on a YouTube video in 2018.

“When you pay something and you know you can get your money back, well buddy, like who’s not going to want to do that work, right?” she said in the video.

Contacted by Global News at her home in Calgary, Power said she paid Weight Loss Grants an upfront fee of $2,000, which would enable her to take on ten new clients through the program.

“I assumed there was some investor doing this out of the kindness of their heart,” said Power.

But she said she got nothing from the program.

“I never actually got any clients referred from them because every single person who expressed interest was referred to Dalewood,” Power said.

Global News contacted Dalewood and Weight Loss Grants to request on-camera interviews and the companies declined.

When a journalist and camera operator showed up outside the Weight Loss Grants office in mid-town Toronto, a male employee hid in the washroom after being questioned about the company’s tactics.

Later, a man identified as George Scodras, director of operations of Dalewood, refused comment as he returned inside the Weight Loss Grants office while pushing the door closed.

“It’s sad. You feel silly, and the whole time I promoted them to my friends,” said Sardella.

Penfold said dissatisfied customers have approached the Ontario consumer ministry and the Canadian Anti-Fraud Centre to file complaints about Weight Loss Grants.

“Justice needs to be served, there’s a lot of victims out there,” she said.

— With files from Alvin Yu and Anne Drewa

© 2019 Global News, a division of Corus Entertainment Inc.

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