Potential Domain Scam

[danielr]

I would like to make domain sellers aware of a potential scam and I think it is a MUST read if you have a decent size portfolio for sale. I believe most of us are venerable to this, and I have always been reluctant to make a post about this scam….. because the bad guys have eyes also.

The only reason why I have decided to post this is because of a similar incident from a differnt post on this forum.

The objective of this scam is to make the domain seller get over extended and be forced to sell the really good name at a very low cost.

How would a scammer do this?

The scammer would find all the names that a seller has listed for sale. This would be very easy to do at Afternic from the “view sellers listings” icon listed above each domain listing. Usually a victim to this scam will have a lot of similar names for sale.

Then the scammer would probably be smart enough to know that the seller has the names listed on SEDO as well.

Then the scammer makes many offers on (similar domains) on both auction sites (afternic / sedo) and offers very high prices on these names….. much more than they are worth in bulk.

If the scammer really knows what he is doing, he makes the offer from outside the USA and sends in a check from an overseas bank in US dollars. When the check arrives to Afternic – the seller gets a message that the check has been received and awaiting funds to clear.

The scammer also sends messages to the seller letting them know the checks have been sent / received via the escrow service.

Now the hook is set.

More than likely the seller is counting his chickens before the eggs hatch and has already gone crazy buying a ton of similar names or buying other items not related to domains.

When the funds do not clear or the check is returned from a closed account, there is a very good chance the seller has gone over board and already spent a large portion of the money that will never be received.

Then a real offer for the name the scammer wants to buy can be made at a very low price, and the seller will be forced to sell or negotiate much lower price.

In 2004, when my monthly PPC was less than $3000 per month, I had a domain closing soon on Afternic from a buyer who had already purchased a domain from me and others. This was a pretty big sale for me in the $X,XXX and I counted my chickens before they hatched. The buyer decided they did not want the name and while the domain was closing I bought about 30 similar names.

There is a silver lining to this event but may not be so for others. 2 of those 30 names that I bought are my biggest money makers and do over $2000 per month in PPC. But that was then and this is now… these types of names are just not available on the open market.

If you have a big sale pending... wait till the money is in your bank account before you spend it.

 

[champ_rock]

wow!! thanks a lot..

it was an interesting read

 

[Domainate.com]

If you have a big sale pending... wait till the money is in your bank account before you spend it.

Definitely. I had a $20k sale of PN.net pending on Sedo, and could have started spending before I got the money, but Sedo stupidly let the buyer off the hook because they say "I meant to really bid $2,000 instead of $20,000". Suuure...which is why you went through a confirmation page that says your bid is binding for 7 days and if accepted, enters into a binding contract. Needless to say, I'm REALLY pissed off at Sedo for it, but I could have been MUCH worse off if I built up debt on the $18k I WAS going to get from the sale. A bird in the hand...

 

[-NC-]

wait till the money is in your bank account before you spend it.

IIRC, even then you are not safe, I remember reading about a scam where the buyer paid with a cheque, which cleared, but then cancelled the cheque.
I think it was cancelled, it might have been another process to make the cheque fail after clearance - maybe a stolen cheque. The point is that "cleared" is not as secure as many people think.

The banks reverse the funds all the way including taking the funds back out of your account.

I'm not sure how long you have to wait until you can safely spend the cash.

 

[networkmsia]

IIRC, even then you are not safe, I remember reading about a scam where the buyer paid with a cheque, which cleared, but then cancelled the cheque.
I think it was cancelled, it might have been another process to make the cheque fail after clearance - maybe a stolen cheque. The point is that "cleared" is not as secure as many people think.

The banks reverse the funds all the way including taking the funds back out of your account.

I'm not sure how long you have to wait until you can safely spend the cash.

euuuu thats scary. Perhaps we should have another bank account not related to any internet stuff. Then withdraw the money out from the Internet bank and put it inside the saving accounts bank.