10 tips to prevent domain scam/fraud

You get so excited because a potential buyer just contacted you for a domain with great interest, don’t go on a shopping spree or raise your expectation just yet, it might be a scam and you won’t receive any money or worse, lose your own money. There are con artists working hard days and night for your money (meaning they take time to prepare individual/personal responses, cater for each of their victim). This article could apply to any online transaction and not just domain-related ones.

These are 10 steps/tips to protect your investment and yourself:

  1. Always research the other party
    Who are you dealing with? Is it a legitimate business registered somewhere? Use the Internet to your advantage. The fraudsters did research on you, your contact information; why not do the same to them? Checking for validity is very simple, a WHOIS on their domain name, or a simple search on the Internet (Google, Yahoo search) for their business name. Include the word “scam”, “fraud” into the query to specifically ask for negative results and if you could not find any relevant results then it could be they are really legitimate or they have changed their names, use another email address, use another company name or you are being worked by a new (not necessary inexperienced) scammer.
  2. Think of the worst-case scenarios
    Imagine these scenarios and figure how you should deal with it. When receiving money, ask yourself the questions: can they charge back or reverse the charge? If they can dispute the charge, do you have documents to back up your claim? When sending money, ask yourself if anything could go wrong during the transactions (paid and nothing change hands, shipped but never get to the destination, dead on arrival)
  3. Do not believe anything you see and hear in the reply
    Even if the fraudster refers you to another company that looks legitimate, these companies might be in the same scheme or the other company is also a victim and does not know their credibility is on the line. If in doubt, contact the other company to verify if this person is actually registered, licensed to do business with them.
  4. Don’t send money because you are going to receive more money later
    This is a classic and yet general scheme that could apply to any field. Someone sends you a check for $6,500 USD and asks to get $500 back because they mistakenly added $500 extra. Someone asks you to pay for a domain appraisal certificate, a trademark search at a specific company before agreeing to buy your domain name for 5 grands.
  5. Use visual cues, pay attention to details
    The first thing, the payment form has to be in a secure page (SSL-encrypted, showing a lock or yellow address bar). When you receive a link to the payment site, try to visit some other parts of the site, see if there is any content or just the form to set you up. Check out for irregularities, unprofessional details (broken links, misspelled words). These little things could trigger a potential larger problem and raise your awareness/alert for the whole situation
  6. Be a little paranoid, never let your guard down
    Face-to-face (or on-the-phone) frauds and scams require a more professional breed. Online scams are much easier to pull off and therefore you’re more likely to be tricked online than offline.
  7. If it is too good to be true, it probably is
    You think you’re in for an amazing deal, it could be either these two cases. You’re a talented investor, deal-hunter with proven track record in the past OR you have no clue and someone is playing tricks to get your money.
  8. When in doubt, check it out
    If there is any sign of problem, step back, stop the transactions if it’s not too late and verify/confirm your doubts/assumptions (call someone for verification, call your bank, ask for additional support documents). If you think these steps are time-consuming, think about how much time, money, effort it would take to recover from a charge-back, dispute and emotional distress once you become the victim.
  9. Choose the right payment method
    There are many ways you can send and receive money online. Use the ones you’re most comfortable and have previously experienced/dealt with. Checks could be fake and returned with charge back to your account later. PayPal payments by unverified, non-insured sender or by credit card, can also be charged back later (many cases up to 90 days). Even though you might think for PayPal to accept the payment, the transaction should have passed a rigorous fraud check, it might not be the case. Using an escrow service sounds safe but it depends on the service credibility. If they are licensed or accredited by a trusted source or they are just a random shop just opened a couple month ago.
  10. Have some detective fun
    In the first contact, it could be hard to tell/confirm their validity. Go ahead and ask for more information, confirm your doubt, get them talking, pretend to follow their scheme but do not send them what they want (money or merchandise). Stop and let them know when it get to the point it is such an obvious scam. You can then share the experience with other online users to help people from falling into the same scam or use the evidence to help the police during the investigation.

For those who could not believe why people are doing bad things on the Internet and do not think it is an serious issue. Remember, there are good and bad people, anywhere, online, offline. Scamming, ripping people off is their business and that’s what they do full-time for a living. I hope as more and more people are aware and educated about these fraud schemes, these guys might have to work part-time or better yet become unemployed. I hope this article has been useful for those who are smart enough to smell a stinky con operation and go search the Internet for confirmation.

Now it’s time to report a recent scam. Take an example, this person contacted me (and many other domain owners as reported here and here) to show great interests in one of my domains. He offered to pay a great price but required an appraisal certificate from allfordomains.com that I believe is in the same fraud team

From: Opera Engineering 
Hello,

What is your price for the domain mentioned in the subject line?

I'm very interested in this name.

Did you get offers from other people already?

I run a software company. We develop client-server systems and databases 
in MS SQL and Delphi. Buying and selling domain names is  not my main 
business. Just another way to invest money and make additional income.

Looking forward to do business with you.

Best regards,
Robert Johansen Ph.D.
CEO
Opera Engineering

Companies/Sites involving in this scam operation:

  • Scammer: http://www.operaen.com/
  • Beneficiary: SoftForces – http://www.allfordomains.com/
  • Payment: http://www.emetrix.com/

Digg this!

Comments (5)

  1. 10:52 pm, March 21, 2006Anonymous  / Reply

    I just got one of these exact same things. Very glad I found this site.

    Name used this time was:

    Paul Anestad Ph.D.
    CEO
    Opera Engineering

    using email address:

    anestad@operaen.com

    SCAM SCAM SCAM!! Thanks again for the post. Now who do we actually report this to so it can be dealt with?

  2. 8:41 am, April 29, 2006Anonymous  / Reply

    Got the same email yesterday. Thank god I found your site. They had a fake forum setup too so you would buy the appraisal. http://domaintalk.ourplace.com/Archive/74052.htm

  3. 4:12 pm, May 24, 2006Anonymous  / Reply

    can we do something about it?

  4. 4:17 pm, May 24, 2006Anonymous  / Reply

    With the WHOIS information, you can report the scam to the abuse department of their domain registrar or the web hosting company. With many complaints hopefully someone will take action against these bastards.

  5. 3:01 am, October 9, 2006Anonymous  / Reply

    I need a proof that our price is fair. I hope you understand the importance
    of this question.

    Usually, people who are selling names or web sites, provide buyers with
    appraisals. This is a common practice and I’m not going to change this rule
    because it’s the best way to protect an investment.

    I heard many appraisal companies often made inaccurate appraisals. So I
    cannot accept appraisal from each and every site. I will only accept
    appraisals from independent appraisal companies I know and trust.

    Reading responses from experienced sellers I was impressed by one reply:
    “Many Internet users are not smart enough and popular domain brokers are
    using this fact to make money. They offer them cheap appraisal services. But
    if their customers would have something in their heads they’d understand
    experts could not make a professional research for $15-$20. These appraisals
    are made by machines. Easy money for such appraisers as
    http://www.Afternic.com and several other major brokers that offer cheap
    auto-generated appraisals. In my eyes, all services under $60-$65 are not
    manual and the results are generated by special scripts. I don’t trust
    auto-generated appraisals.”

    The same is true for GoDaddy and SEDO. Their services are not manual. They
    are just collecting money using their well-known names.

    Thank you for understanding. I’m looking forward to do business with you.

    —– Original Message —–
    From: octavio@svc.com.py
    To: Opera Software
    Sent: Sunday, October 08, 2006 9:58 PM
    Subject: Re: bufalos.org

    please enter at sedo.com a make the offer.

    octavio

    Opera Software escribió:
    > How about 70,000 USD?
    >
    > Do you sell the name only without web site? I’m interested in the name so web site is not so important.
    >
    > Do you have an appraisal certificate for your domain name?
    >
    > Domain name is an investment for me. In other words I’m going to sell your name later and make a profit. If I overpay I won’t be able to make a profit in the future. It’s very important for you and me to know the current market value of your domain.
    >
    > Of course, we must be sure that you are engaging a reputable appraisal company. I heard many appraisal companies often made inaccurate appraisals. I will only accept appraisals from independent sources I trust.
    > I heard some appraisal companies often made inaccurate appraisals. So I will only accept appraisals from independent sources I
    > To avoid mistakes I asked domain experts about reputable appraisal companies in a forum
    > http://domaintalk.ourplace.com/Archive/92047.htm
    > Just check this posting.
    >
    > If the appraisal comes higher you can adjust your asking price accordingly. I also hope you can give me 10% – 15% discount of the appraised value.
    >
    > After I get an appraisal from you we’ll continue our negotiations.
    >
    > How do you prefer to get paid: http://www.escrow.com, http://www.PayPal.com check or wire?
    >
    > Hope we can come to an agreement fast.
    >
    > Looking forward to your reply.
    >

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