I dug into this a little deeper and it seems like the culprit might be the double stick tape that is sandwiched between the scroll pad and the mouse. The double stick tape is used to secure the scroll pad to the mouse. I think what is happening is the double stick tape is acting like a conductor and causing the sensor strip underneath the scroll pad to "short out". By popping out the scroll pad and then removing the double stick tape, this prevented the sensor from shorting out and the scroll functionality seems to be working great again.
Here's how to pop the scroll pad off. From the top of the scroll pad, use your fingernail and push down on the pad. From the side of the pad, use your fingernail to pry the pad off. Caution!!! Pry from the top, there is a clip on top that unhinges to pop loose the pad. It does not pop out at the bottom as that is where the sensor wires runs from. Once you pop the sensor off the top, you should be able to see the double stick tape. Again, use your fingernail to remove the double stick tape then once removed, snap the pad back down. Turn your mouse off and on again. It should be good to go.
Hope that helps...