Curtis,
I agree with what you're saying. It seems counterproductive to me also to use the "scam" gambit. One is likely to end up with one of two prospects:
Prospect 1 is looking for a reason not to buy - s/he wants the negative. These may be hard to persuade.
Prospect 2 is looking for a reason to buy - and yet they are coming to your site with a negative frame of mind. This tactic sometimes or maybe a lot of times works - but I do not think it is an honest approach.
At the beginning of this (slightly hijacked, sorry Ben) portion of the discussion, I was inclined to try this at some point. Now I think I'll leave it for others, no matter how profitable they find it.
Greg,
I think many of my comments apply to your situation too.
My own thought is to ban the negative ads, with a similar explanation - you don't perceive this tactic as honest marketing and you would rather lose sales resulting from a ban than profit from anything that might call your integrity into question.
In the long run, I see no downside from consistently taking the high road.
Andy