“A fool and his money are soon parted.” Thomas Tusser (English Farmer and Writer. 1524-1580). It goes without saying that anywhere money is exchanged there is going to be someone waiting in the shadows that will try to take it from you. This is especially true on the Internet because people often think they are anonymous (they’re not!). Being behind a computer often plays to the belief that people can do what they want and suffer no retribution.
I have seen many transactions where people ended up losing large amounts of money because they were new to domaining and trying to go at it full bore. If you’re a new Domainer ,it is always best to get on the forums and just watch for a little while before buying. When I first got into this business, I read and read and read until I felt like I was ready to start parting with money. If you’re not ready, then keep your money in your wallet and wait until you are. Good deals will always come along, it’s ok to let them pass by when you are starting out and beginning to learn.
With that being said, even after your waiting period and your domain studies, you (and anyone else in this industry) are still a mark for being scammed. Please see the tips below to help keep you from getting taken advantage of:
PayPal is the payment method of choice for Domainers for small to medium transactions; however, PayPal offers no protection to the Domainer.
Take this situation for example: You have found a domain listed somewhere that you wish to purchase. It is a good name, decent price, and the owner seems nice and reasonable enough. He states that a domain receives X,XXX amount of traffic per month and makes XX amount of dollars from parking. You pay the owner for the domain and he transfers the domain to you. You then park the domain and it receives ZERO traffic, thus it makes no money. Unless the previous owner is willing to give you a refund then you have just lost all of your money.
Why? Because PayPal views the sale of domains, web sites, and other virtual items effectively as they are, virtual goods. They cannot be expected to help out in situations where they cannot efficiently or reasonably verify if a domain gets traffic or not. Truthfully, this would not likely appear as one of their primary interests and it is understandable that they should not want to get wrapped up in these types of disputes. PayPal may likely be more interested in a dispute when the sale of the goods goes through one of their auction houses or if the item is tangible. PayPal can claim they can’t be blamed for at least two reasons; (1) it wasn’t their goods or services being sold and they did their job transacting the goods between parties of equal bargaining power; and (2) Caveat Emptor (buyer beware)!
There is also the other scenario where you pay for the domain and the owner never pushes it to you. This scenario ends just as the one above, with you becoming scammed, only this time you don’t even get the benefit of receiving the domain.
Escrow is often a popular method of buying and selling domains. Two parties agree on a domain sale and the buying party pays the escrow service directly for the domain. The seller pushes/transfers the domain to the buyer and once the domain has been verified as being in the possession of the new owner then the escrow service will release payment to the seller. This can cost anywhere from a few percent of the sale of the domain all the way up to 15% or more depending on the amount of the transaction and what service you use.
Escrow.com is a popular avenue for Domainers doing high dollar transactions. They charge a bit more for their transactions but provide a decent service.
Epik.com has a great escrow service and it is cheaper than most of the services currently being offered. It is especially good if your domain is already at Epik.com as the process is fast, inexpensive, and easy.
Sedo.com is one popular option because of the variety of services they offer. When a domain is sold through Sedo.com part of the commission that the seller has taken out of their sale price is for the escrow transaction. You push the domain to Sedo.com’s own account at the registrar and once Sedo.com has received the name they then release the funds to the seller. They also then push the name to the buyer.
At the end of the day it is not who you use, but how you protect yourself. Don’t make yourself a target, especially if you are going to spend a lot of money on domains. Keep a low profile. And when you’re making large dollar transactions over the Internet, PayPal is never an option. Consider yourself warned.
Hijacking is becoming more and more prevalent in the domain space. This is basically using any number of means to gain control of another users account and stealing his/her domains. This can be done by guessing passwords, keylogging (capturing users’ key-strokes with planted software), random password generators trying to crack an account, or other nefarious methods.
Once the hacker has gotten into the account, he will then usually transfer the domains away to another registrar. From there he can do any number of things, he can try to sell the domains, redirect the traffic (if there is any) to his own programs/parking so he can make money or even just use the domains for his/her own web site. Usually, and in most cases, the thief will try to sell them immediately.
There have been thousands, if not tens of thousands, of domains stolen. Sex.com was stolen at one point in time along with deleted.com and many, many others. The best practice is to never make your registrar or domain account passwords easy, never access your domain accounts from a public computer that may have some kind of key logging software installed, and never share your passwords with anyone else.
Make sure your passwords are not saved or cached on your computer. Make sure that your domain accounts have intense levels of security such as 2step authentication. Finally, keep ALL of the domains that you own “locked” at the registrar at which they reside. Choosing this option at your registrar will keep you from inadvertently accepting a transfer-away request because you are doing a lot of domain sales. If you’re looking for maximum security, Epik.com offers a Max Lock that puts a lock on your account as a whole so even if a domain is “unlocked”, it cannot be transferred out.
Ethics: Honesty in the Marketplace
Since we are talking about scamming, now is a good time to bring up domain ethics. If you are not honest in the domain marketplace then you will not be in the domaining industry very long at all. It still amazes me that a select few will come in and try to take people for a ride. I have seen where people scammed others out of $1,000 very easily by selling a domain with supposed traffic, or selling a web site and it never gets moved over to the buyer’s account, domains that never get transferred after the buyer pays, etc.
However, that $1,000 fraud probably just cost that deceitful seller a lifetime loss in domaining. If you have the opportunity to take someone for a few dollars, think twice. Domaining is a very niche industry and your honesty, integrity, and your word follow you throughout your domaining career.
Be honest when you buy or sell. If you want to build an empire, then you are going to need some help along the way. It’s important to establish a good relationship with a large amount of people as you make your way in the domain industry. Make and keep friends, and above all, don’t do anything that will make someone not trust you because no one will do business with you. The domain industry is large enough to make a lot of money, but still small enough to where you can be excommunicated.