Recent events have made it very evident that both PayPal and GoDaddy support and protect internet scamming, identity theft, and fraudulent account activities. PayPal and GoDaddy are giants in their respective market segments and domainers have been using both for years. Domainers trusted their domain sales and transfers in the hands of these two corporations, but I do not think that trend will continue much longer.

Recently there have been a lot of scammers going on to forums and initiating sales and purchases of LLLL.com (4 letter .com domain names.) What happens is the scammer either creates a new username at a forum or he somehow hacks into a preexisting username and emulates another user. The scammer then sends out private messages (PM) to users that have posted their domains for sale and offers to buy them. Once negotiations have ended and a price has been established by both the seller and scammer, the scammer sends payment. Currently these scammers only pay via PayPal and only buy names that are registered at GoDaddy; of course, there is a reason for that.

The scammer sends payment via a STOLEN or HACKED PayPal account, assuming the identity of that person. Once the seller receives/confirms payment via PayPal he or she transfers the domains registered at GoDaddy to the Scammer. In order to complete the transfer of the domain the buyer (scammer) must provide the following information: Name, Complete Address, Country, Phone, and Email corresponding to the GoDaddy account where the domains will be transferred to. Usually, the account information is manipulated to match the identical information as the stolen PayPal account, preventing suspicion. Now the seller transfers the domains to the scammers GoDaddy account. Once the domains have been transferred a confirmation PM is sent and the scammer of course says everything is perfect. The seller goes to sleep happy and the scammer is grinning ear to ear because within minutes the scammer initiates a Chargeback on the stolen PayPal account. A chargeback occurs when fraudulent activity or unauthorized purchases have occurred and PayPal immediately reclaims the funds, without question. After the chargeback is completed the funds in the sellers PayPal account are $0.00. At this point the Scammer has the seller’s domains and the seller has neither the money for the domains nor the domains themselves.

This is where both PayPal and GoDaddy facilitate and condone the scammer’s getaway. The seller calls PayPal and asks,” What happened to my money?”
PayPal responds with, “We are sorry sir but the funds you received for the following transaction were fraudulently acquired and the TRUE owner of the account denies initiating the transaction.”
The seller then asks, “Well, do I get my money back? What about my domains can I get those back?”

PayPal responds with, “Actually sir because domains are an INTANGIBLE item they do not comply with the Seller Protection Agreement and are not covered by PayPal, only TANGIBLE items are covered against charge backs. We recommend contacting your registrar to see if they can help you.”
Seller says, “Ok, so the TRUE owner of the account gets his money back, the scammer gets my domains and I am left with neither! I don’t understand how this is possible. Can you provide me with information that you uncover about the scammer so I can contact him or her?”
PayPal representative, “Unfortunately there is nothing we can do for you on our end. Any information that we find can only be obtained by SUBPEONA. The only thing you can do is take legal action against the perpetrator.”
Seller says something along the line of, “This is unethical and you will hear from my lawyers, I will never use your services again,” and then hangs up.

So that’s step one in the Scammer’s getaway. PayPal is concealing the identity of the scammer; they can easily track him or her down via a reverse IP lookup to see who initiated the transaction. They protect the TRUE owner of the account and the thief but they do not protect the seller? The seller is the one that has to pay the 3.2% fees, for what, what are those fees going towards if they cannot even protect you. If a transaction is for intangible goods then you should not be FORCED to pay their fees, there is no point.

Here comes step 2 in this disappearing act. By now the seller is feeling agitated but still feels that their is light at the end of the GoDaddy tunnel. The seller checks the WhoIs.sc information for the stolen domains and sees that they are still registered to the THIEF and remain in the GoDaddy system. Surely it would be easy to reverse the transfer; it should not be that hard, you have the GoDaddy email along with all the other contact info to which the domains were transferred to…WRONG! You decide to contact GoDaddy and see what they can do. After explaining your situation to the representative they respond with this, “Unfortunately, GoDaddy does not get involved in third party disputes. This is why we have TDNAM, so you can sell your domains safely.”

TDNAM is an online auction site OWNED by GoDaddy wherein the seller must pay a yearly fee of $6.95 and Escrow fees.
Seller says, “WHAT! These domains were stolen from me and they are in your system. They were just transferred hours ago and I can’t get them back?”
GoDaddy, “I’m sorry sir, but since these domains were not transferred via TDNAM we have no responsibility to the buyer or the seller. Once the account change is initiated and accepted we are not involved.”
You go back and forth with the GoDaddy representative but get nowhere, there is nothing you can do, and you just got SCAMMED.
The only way to get your domains back is by legal action or reporting the problem to ICAAN.org. Or by the grace of God you find out who the scammer is and harass them to the point of forfeiture. Other than that you are shit out of luck and there is nothing to be done.

That is how I and countless other sellers got scammed and all we can do is sit here holding the bag. We thought we were safe, but both of these companies take no initiative to solve our problems, despite the crimes involved. It is almost as if they are aiding and abeding criminals. The scammers know every angle, they choose GoDaddy and PayPal because they know that they do not pursue or amend fraudulent transfers and charge backs. The next step is to file a class action lawsuit against PayPal and GoDaddy . All I ask is that anyone that has had this occurrence please email me at benvardag@aol.com, I will compile a list of victims and their situations.

Courtesy of BGMV at http://www.namepros.com

Welcome to my blog.  I’ve created this blog to provide tips to buyers and sellers on ways to safely buy and sell domain names. 

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Buying a domain can be a daunting idea.  The fact that you are sending money to someone with no assurance that you will receive anything in return can be a scary idea.  There are several things you can do as a buyer to ensure a successful transaction.

The first thing you want to do is try to verify the identity of the seller.  This is important to ensure that they are indeed the rightful owner of the domain.

Next is determining how to receive payment.  There are many ways to get paid for your domain including cash, money order, check, wire transfer, or online payment services.  It is strongly recommended that if you choose an online service you use one that is friendly to domain buyers.   At this time the service that is safest for buyers is PayPal.  PayPal has policies in place that strongly favor the buyer of a domain name.  If possible you should use this service for buying your domain name.  There are other services that are safe to use, but lean towards the seller.  MoneyBookers is service that is becoming more and more popular with domain name sales due to it’s stronger fraud prevention.  NOTE:  if you are selling a domain you should avoid using PayPal as it offers little protection to domain sellers.

The safest way for both parties is to use Escrow for the transaction.  Escrow functions as a middle man, holding the funds until both parties verify that the transaction has completed successfully.  The buyer sends the money to the escrow service who holds the money.  The seller then transfers the domain and when the escrow service verifies that the domain has been transferred they release the funds to the seller.  MoneyBookers has an escrow service that is very affordable, charging only 1% for the transaction.  Additionally they charge the buyer 2% up front as a deposit to ensure his swift actions in completing the transaction.  Once the transaction is complete the 2% is refunded.

Escrow.com is a commonly known escrow service that provides the same function as MoneyBookers.  However Escrow.com charges a higher fee and does not guarantee against chargebacks.

Prior to sending any payment you should find out what registrar the domain is registered with. The easiest way to transfer the domain is to have an account at that registrar.  Most registrars allow free transfers of domains to another account with their service.  If feasible you should open an account at the registrar that the domain is registered with to ensure the faster transfer of the name.  If not possible you will have to initiate a transfer between registrars and this is a time consuming and sometimes cumbersome process.

Once you have sent the money you should contact the seller with a copy of the receipt and ask them to initiate the transfer to your account.  If using a transfer between registrars you will have to ask them for the authorization code for the domain and initiate the transfer through your registrar.  Ask the seller for copies of all communications between the seller and the registrar for your records.

It is recommended that you keep copies of all emails regarding the sale of a domain in the event that there is a dispute over ownership of the domain.

Selling a domain name can be a quick and easy task, or it can be a long drawn out process.  Either way as a seller you want to take steps to ensure that you are not going to get scammed.

The first thing you want to do is try to verify the identity of the buyer.  This is important in two ways.  The first is that how much you can sell a domain name for may change significantly depending on the buyer.  If the buyer is a large corporation you may be able to get substantially more for your domain.  But more importantly you want to ensure that you are dealing with an honest buyer and not a scammer.

Next is determining how to receive payment.  There are many ways to get paid for your domain including cash, money order, check, wire transfer, or online payment services.  It is strongly recommended that if you choose an online service you use one that is friendly to domain sellers.  I have found that the most friendly to sellers is MoneyBookers.  MoneyBookers has policies that make it very difficult for a buyer to issue a charge back on the purchase.  This is becoming a very common way for scammers to avoid paying for a domain through other online services such as PayPal. 

MoneyBookers policy is that a buyer must fully fund the account prior to the sale.  This means that they cannot directly purchase a domain via their credit card, making it very hard, if not impossible to start a chargeback on the transaction.

The safest way for both parties is to use Escrow for the transaction.  Escrow functions as a middle man, holding the funds until both parties verify that the transaction has completed successfully.  The buyer sends the money to the escrow service who holds the money.  The seller then transfers the domain and when the escrow service verifies that the domain has been transferred they release the funds to the seller.  MoneyBookers has an escrow service that is very affordable, charging only 1% for the transaction.  Additionally they charge the buyer 2% up front as a deposit to ensure his swift actions in completing the transaction.  Once the transaction is complete the 2% is refunded.

Escrow.com is a commonly known escrow service that provides the same function as MoneyBookers.  However Escrow.com charges a higher fee and does not guarantee against chargebacks.

Finally you have the transaction itself.  If you choose to use a funding source that does not provide escrow you will want to ensure that the funds clear your account prior to initiating any transfer.  You should be aware that PayPal is not a safe way to receive payment and that paypal has a history of protecting the buyer while providing no safeguards for a domain seller.  When funds have been cleared you should initiate the transfer of the domain to the buyer.  Make sure to get an email from the buyer stating that they have received the domain for your protection.

It is recommended that you keep copies of all emails regarding the sale of a domain in the event that there is a dispute over ownership of the domain.

There are many ways to verify the identify of someone, and none of them are entirely safe.  Most experienced buyers and sellers will start with a google search on the person’s name and email address.  Find out everything you can and make sure that you don’t see anything that indicates the person might be a scammer.

Many have started to avoid doing business with anyone who uses a free email account at sites such as yahoo, gmail, msn, aol, etc.  Anyone can setup an email address there in minutes, which plays into the scammers hands.  Ask them to send you an email from a “real” website and if possible one that is owned by them.   Verify the email, name, address and phone number via a whois of the domain they are sending from.  Most experienced domainers have a domain that they use for email and as such the contact information on the whois should match what they are providing you.

If the person you are transacting with is a member of NamePros, DP, or other domaining community check them out there and look at their past transactions.  Always be wary of someone who has only joined recently and has no transaction history. Yes they may be a newbie, but they could also be a scammer.  Use extra caution when moving forward with the transaction.

 On larger transactions I like to talk to the person via the phone.  Ask them for a phone number where you can contact them and then call them.   Have them verify their contact information and ensure that this matches what you see via the payment method they are using.

 Some people prefer to have a name, address and phone number that can be verified by a lookup in the phone book.  If dealing with someone in your country this is fairly easy, and with the migration of phone books to the internet it becomes easier to verify the person.  Call the number listed in the book and talk to the person you are dealing with.

The bottom line is that you want to make all efforts possible to verify that the person you are transacting with is indeed who they say they are.  Scammers are becoming more and more adept at phishing and taking over someone else’s persona during the transaction.

If you have been the victim of a domain scam, either buying or selling please take a moment to post your story here.  If you have had your domain stolen please post the domain and all of the details of the person you think stole it.  Get the word out so others don’t get scammed by these same thieves.