Scraped content (ads) on classified websites

Here's the problem, I'm working with a couple of niche classified websites both in the UK and US. Both of which have been hammered by Panda and Phantom/Quality updates over the past few years. Organic traffic has slowly been eroding away over this time to the point where both currently stand at around -50% on where they were a few years back.

Both sites share similarities beyond the fact they have been hit by every Panda and Quality update since 2011. Both suffer from significant index bloat, thin content, article content ripped from other sites etc. All of the above has been nuked / is being dealt with.

However, the client is suffering from more ads = more organic traffic tunnel vision. As a result around a third of the ads on their site (talking 1000's) are scraped from other sites (paying customers, content sharing between other group owned websites, canvassed from competitor sites etc). We know scraped content is a no no, but in classifieds do Google provide some degree of leniency, knowing users often post on multiple sites in order to gain maximum exposure? Perhaps. However, not on this scale. When a site dumps 1000's of indexable duplicate ads on the site for the purposes of gaining traffic surely this would flag Panda and Quality signals. My guess would surely be yes. To make matters worse the client is intent on ramping up the scraped content in order to help regain lost organic traffic

To me it seems obvious that this volume of scraped advert content will be contributing to ongoing Panda and Quality (and ultimately organic) issues, and certainly isn't a solution for recovery.

Thoughts appreciated.

Thanks.