Guide To Avoiding Domain Name Scams

Small businesses often face various challenges during tough economic times, including the threat of scams.

Scammers use different tactics to deceive businesses, including domain name scams. For example, like us, a business may have a domain name slightly different from its trading name, such as ‘businessarticleshub.com’ instead of ‘businessarticles.com’.

Like us, a scammer may approach a business, claiming you can buy the two-name domain at a low price. Unfortunately, it is invalid, but their sales pitch can be compelling, and businesses fall victim to their scam.

This article describes our first-hand experience with a domain broker and provides tips on avoiding being scammed by domain name brokers.

It Happened To Us

We got this email from a Gmail address:

Are you interested in being the new owner of businessarticles.com? It will be on sale soon, and we would be happy to send you more information about this; just let us know. Have a great day!

Our response:

How much do you want for it?

The following email we get is from a legitimate domain name website:

Hello, the domain name businessarticles.com is priced at $150 USD and belongs to a client who is putting it up for sale. If you want, I can put up a “Buy Now” page on it and contact you when it’s ready. While we usually use PayPal and Stripe to facilitate our transactions, we also offer 3rd party escrow over DAN.com (a GoDaddy brand) at no additional cost. As a domain escrow, they make sure we won’t get the money before you get the domain. They accept major credit cards, PayPal, wire transfers and bitcoins. If you have any questions, feel free to ask.

At this stage, we’re thinking ‘Wow’ $150 for a two-word domain – what a bargain. Their website confirms they are domain brokers, so what could go wrong?

We could have sent them $150, but with further research, we found another broker offering to ‘represent’ us for the ‘auction’ of the business domain for $69.

We then visited many domain valuation sites and found out the domain was worth more than $5000 – so why would a domain broker sell it for $150?

By now, we realised something dubious was going on, and our suspicions were confirmed when we got another email from another email address:

businessarticles.com will be released back to the market soon; if you want to be the new owner, please let us know, and we will get back to you 🙂

Why would we get a similar email from two gmail addresses and then one domain broker email address? By now, we would never pay the broker USD 150. We searched further and found a Reddit conversation confirming the same scam approach to a small business.

The business of third-party domain brokers

What do we think is the business of third-party domain brokers?   We believe many domain name brokers spend their time looking for domains that may soon expire and come up for sale.

Once they locate a domain, the domain brokers then find similar domain names, of which there would be many and offer the owners the opportunity to purchase the soon-to-expire domain using emails like those mentioned above from our experience.

With this strategy, the brokers may get a few interested parties who pay the fee believing they have purchased the domain name; however, the domain is not theirs to sell.  The brokers keep the money even if the expiring domain doesn’t go to auction.   Their claim is they tried to get you the domain!

How can you avoid being sucked in by this scam? Keep reading for top tips on verifying domain brokers.

How To Avoid Domain Name Scams

Avoiding scams when dealing with domain name brokers requires careful research, scepticism, and adherence to best practices.

Here are some tips to help you avoid being scammed by domain name brokers:

Research the Broker

Look for reviews and testimonials about the broker online. Check if the broker is a member of reputable industry associations or organisations. Verify their contact information, including a physical address and phone number.

Visiting the broker’s website is not enough research. When we saw the broker’s website – it looked professional; however, when we used their search engine to search for domains for sale, it didn’t work.

Check Domain Ownership

Use domain registration lookup tools to verify the ownership of the domain name. A good one to use is whois.domaintools.com or try lookup.icann.org

Ensure that the broker has the legal right to sell the domain. This action may not be easy to ascertain as domain brokers often get the right when they have the prospective purchaser.

Escrow Services

Use reputable escrow services for transactions. This ensures the funds are held in a neutral account until both parties fulfil their obligations.

Be cautious if the broker insists on using a specific, unfamiliar escrow service. Reread the email we received from the broker regarding payment. It looks legitimate and trustworthy.

However, the money you have released has left your account. You may need to read terms and conditions that are easy to miss, and your money is released to the broker.

Secure Payment Methods

Prefer secure payment methods, such as credit cards or trusted payment gateways. Avoid wire transfers or other non-reversible payment methods. Using PayPal is a good move as you have not revealed your credit card details.

Check for Red Flags

Be wary of high-pressure sales tactics.

Watch out for brokers who claim the deal is urgent or too good to be true. As the saying goes:

If it is too good to be true, it is too good to be true.

Be cautious if the broker is unwilling to provide detailed information or answer your questions. Or, in our case, it claims something that is not true, i.e., says the domain is priced at $150.

Verify Identity

Request identification and verification from the broker. Legitimate brokers should be willing to provide this information. Often, events happen quickly, primarily online. However, slow down and follow this process if every other check you’ve done appears legitimate.

Use Reputable Platforms

Consider using well-known domain marketplaces or platforms that have a good reputation.

Research the marketplace’s policies on fraud prevention and resolution. Using GoDaddy’s domain site provided evidence that domain brokers charge a fee before they provide a service where they represent your interest in purchasing a domain. However, do you need to use them? The Reddit conversation mentioned above suggests you do not. Instead, you can define your interests.

Consult Legal Advice

If you have concerns about the legitimacy of a domain broker or a transaction, consult with legal professionals specialising in domain name transactions. Take this action for domain name purchases that cost more than $100.

Be Skeptical of Unusual Requests

Be cautious if the broker requests sensitive information beyond what’s necessary for the transaction. Avoid brokers who ask for payment outside of standard channels.

Trust Your Instincts

Trust your instincts and consider walking away if something feels off or too good to be true. For example, our experience getting an email from a Gmail address and what looks like a legitimate domain email address raised concerns about the authenticity of the broker.

Remember that scams can evolve, so staying informed about current scams and vigilance are essential. Always take the time to do thorough research and due diligence before engaging in any domain name transactions.