Domain Name Scam Warning : Pumping and Dumping Domains
Saturday, January 3rd, 2009
In a fashion reminiscent of investment pump and dump scams, domain sellers list domain names for sale and pump cheap traffic to the names to make them look appealing and then dump the names on unsuspecting buyers. These scammers list domains for sale on domain aftermarkets that advertise the inflated traffic information and dump the domains off on a buyer who is likely unaware that the traffic is temporary. This is not a new scam, but it appears that we have some damning evidence of scammers in action on TDNAM.com.
To be clear though, we are not pointing to TDNAM as a perpetrator with any involvement, rather they are merely the venue where scammers are preying on unsuspecting victims. The sellers in a pump and dump are the scammers not the venues. We are sure this happens at more than just TDNAM and don’t mean this article to suggest otherwise. The links we were given show what is easily perceived as sellers engaged in “pumping and dumping” domain names being sold on TDNAM. Anyone buying any domain names in the aftermarket on the basis of traffic numbers should be aware of this scam.
This activity can also occur outside of an aftermarket venue. When selling a domain name in public, say on a forum, it’s common for sellers to receive requests from savvy domain investors to “test the traffic”. The request is made in order to validate any claimed traffic. It’s the domainer equivalent to due diligence. Most sellers in this arena are also familiar with the practice. Sellers know that they won’t be able to sell a domain that they pump with bogus traffic and not be caught. The risk of being exposed on a public forum as a fraud are likely strong enough that this doesn’t occur very often. Since whois records can be changed and new identities created easily, it is still possible to run this scam outside of the confines of an aftermarket platform.
An aftermarket platform, however, often provides even more unsuspecting buyers for the scammers to prey on and their terms give the sellers a shield to hide behind. TDNAM, like Sedo.com and other domain aftermarket venues, display domain traffic numbers in the auction details. The problem with this information is that it is a fairly vague number and only the venues themselves know the details. The source and quality of this traffic is not reported and typically not guaranteed. The TDNAM legal terms only mention this about traffic :
Some Expired Domain listings may include traffic data labeled as “Unique Visitors” (the “Traffic Data”). The Traffic Data is provided AS IS and for informational purposes only. The Traffic Data reflects internally calculated data and does not represent a guarantee of continued traffic in any way.
I was unable to find a terms of service disclaimer on Sedo, but I’m sure that the numbers they post are also not guaranteed. Obviously, not guaranteeing traffic provides an “out” or protection that sellers can hide behind as they pump in as much traffic to a domain name. When the domain is sold and the unsuspecting buyer realizes that there is no traffic coming to the domain, the venue and seller can simply reply “We don’t guarantee the traffic”. This lack of any guarantees enables the pump and dump domain scam.
This is one of the reasons most savvy domainers who buy on aftermarket auctions follow the rule of caveat emptor (buyer beware), knowing full well that the numbers can’t be relied upon. What happens to the novice unsuspecting domain buyer ? TDNAM, being run by the largest domain registrar, likely has a customer base that is not primarily made up of savvy domainers and likely is unaware of these sorts of scams. To an unsuspecting buyer or novice, a domain with a reported high amount of traffic may seem very appealing. There are likely far more unsuspecting buyers on these aftermarket sites which enables the scammer even more.
Need Some Evidence ?
So how do we know this is happening ? Here’s two example domain names that are for sale on TDNAM as of this writing (Friday at 3 am cst) that seem to be “pumping and dumping” (see screen shot below). Both names have sold in the process of writing this story. The TDNAM numbers shows 1723 for the domain VideoGameSupermart.com and the domain Dvdroms.net reports 39097.
It’s interesting to note that the domains mentioned above are not expired domain names. The only mention of traffic in the terms of service on TDNAM that I could find (see above) talks about expired domain traffic not being guaranteed. Does that mean that they are guaranteeing the traffic numbers non-expired names listed on TDNAM? I doubt these are guaranteed numbers and I’m guessing this omission in the TOS disclaimer will be fixed very soon. There’s a note on the auction page next to the traffic numbers that says “The traffic data is provided AS IS and for informational purposes only. The traffic data reflects internally calculated data and does not represent a guarantee of continued traffic in any way.”
Let’s look closer at Dvdroms.net though. The traffic numbers claim it is getting over 1000 uniques per day. That seems to be a stretch, but maybe it’s not. Where could this traffic be coming from ? A former website with incoming links ? Not likely based on a Google link check. Type-ins ? I highly doubt it. How about just buying up traffic before you put the domain on auction ? Enter the company UGGIcorp.com, a company that sells traffic on the cheap.
Setting up and getting Traffic is fast and simple. We charge $2.000 per 3000 Unique Visit. We will review your website and will have it active within 1-12 hours. Make Sure Your site follows our terms. These Traffic Packages are not adsense safe unless it says so on the package.
UGGIcorp has a page on their website that displays how much traffic they’ve sent to various clients during the month (screen shot below in case it goes away). It turns out that both Dvdroms.net and VideoGameSupermart.com appear on the list of domains that received this “pumping” of traffic in December.
SOLD !
Dvdroms.net ended up selling for $265 on TDNAM (sorry link not available). If the seller bought 50k uniques worth of traffic, as the UggiCorp site seems to be saying, he likely paid around $30. Add in the $10 paid for the domain, and you’ve got a nice profit of $225. Videogamesupermarket.com was sent around $2 worth of traffic and sold for $69 .
Ok, so big deal. It’s only 2 domain names, right. Wrong.
First, these aren’t the only names selling on TDNAM that appear on the UGGIcorp list. The same seller appears to be doing this with multiple domain names listed on TDNAM. Secondly, these are only the ones we found that had some sort of evidence linking the bought traffic to domain names offered for sale. Like cockroaches, once you’ve seen one scammer, rest assured there’s more hiding out somewhere. I’m sure there are other sellers doing this same thing, but with a little more stealth. If not now, I’m sure after this post, the practice of pumping traffic to domains will be done with more discretion in the future.
To top off the story, the whois for the domain names that we mentioned seem to contain bogus information. Another thing someone pointed out when we discussed this issue is that these domains all go to a Godaddy parking page. Most PPC companies and search engines frown on traffic that is bought and pumped in to a landing page. Do you think that the advertisers on that landing page want to pay for this sort of traffic ? It’s a violation of terms to have bogus whois info and it’s a pretty safe bet that pumping in traffic to a lander is also a terms of service violation somewhere.
Buying domains on the aftermarket comes with risks. Most savvy domainers know about this scam (possibly having been burnt by it before), but others might not. Buyers need to be aware of these type of scams. This example seems to be a clear case of “pump and dump” domain selling. Hopefully, in the future something can be done on these aftermarket platforms to combat these scams.
Thanks to our friends at DomainAuctionCleaner.com for alerting us to this.
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Original post by Adam Strong