Buying a Domain? How to avoid being scammed.

As the domaining industry becomes more popular scam artists find a growing market to profit from. With a growing number of places to buy domain names how can you make sure you’re really getting the deal you think you are?

If you are buying through a major listing service like Afternic, Sedo or Snapnames then the chance of fraud is greatly decreased. This does not mean though that you can let your guard down. Domainers need to be very careful when buying from online forums or when contacted by interested sellers. As with any investment you make in life – it always pays to do your homework.

When buying a domain based on name-value, the only real information you want to be sure of is that the person selling you the name is the actual owner. This can be verified in a number of ways but the best initial check is to just take a peek at the WHOIS entry. It is amazing how many people will buy a domain name without looking at the WHOIS entry first. It’s an early warning sign if the names, addresses, city, etc. don’t match. This will give you reason to look a little deeper.

If the WHOIS information doesn not match-up you can tell them to change it to match their own information. If they are indeed the domain owner they can easily make this change. Another technique that I often use just to be 100% sure is ask the owner to make a small change like adding the numbers "123" to the company name. In general you can rest much easier knowing that the seller can edit this information. For any sale in the $x,xxx range this is a must.

For domain names that are being purchased based on traffic this can be much more complex. The first thing you’ll want to do is ask the seller for 1-year traffic and revenue stats. If they can’t provide this, don’t buy. This is a simple piece of information to provide and anyone trying to sell a name based on traffic needs to be able to provide this information.

The next thing you need to determine is where the traffic is coming from. If a seller is claiming that their domain gets 5,000 hits a month but 4,800 of those hits came from a paid traffic blasting service you’ll need to know this information. By getting a year of stats you should be able to see if there is any suspicious increases in traffic.

The best way to verify if a seller is being truthful about traffic is by asking them to put a piece of tracking code onto the site. You can then monitor the traffic through your own tracking software and see exactly where the traffic is coming from.

On NamePro’s a seller recently sent me details on a domain name he claimed was making $20/month in revenue. I asked for 1-year traffic and revenue stats. He provided data but only for March of 2008. Thinking this was a bit fishy I took at look at the WHOIS – the domain was registered less than a month ago! This domain hasn’t even been in existance for a full month but the owner is already claiming consistent $20/month revenue. These are the types of scams you can avoid by doing just 2-3 minutes of research.

There is no doubt about it – we are all on the verge of something great. This is truly the very beginnings of what will be a huge thriving market. As with any market, more people and money changing hands eveyday draws scam-artists in. Do you homework and understand exactly what you are buying. By being proactive and making informed decisions you will get the best deals and scam artists will find it harder and harder to make money. 

{ 1 comment… add one }

  • Damir March 13, 2008, 5:12 pm

    Nice post there, it is very informative but as with everything in life there are two sides of it.
    As there are many con “artists” pretending to sell domain names so there are many of them pretending to buy them (in reality steal them).
    I have come across many of them which want to steal them.

    Reply

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