Despite being labeled as ‘cybersquatters’ by most of the media, domainers seem to lead a pretty easy life. They wake up in the morning, register a few domain names for less than ten bucks each, and sell a few for $10,000+…right? In some cases, the answer may be yes, but for the majority of domainers, the answer would be a resounding no. While those new to the domaining industry have to learn the rigors of negotiating domain buys and sales, they also need to be aware of the many legalities, frauds, and scams that occur in the industry. For the benefit of these rookies, it’s necessary to familiarize yourself with these potential dangers so that you can tread the shark infested domaining waters without becoming being pulled under.
Trademark Legalities and Domaining
When it comes to domain names and trademark law, there are two fundamental rules:
- You can not use a domain name that might confuse people about the source of your goods or services
- You can not use a domain name that invokes a famous product or service, even if people would not be confused.
These trademark rules, whether violated or not, can cause headaches for domainers on a daily basis. Probably the biggest complaint from domainers would be the constant ”Hey, that’s my name and you have to give it to me” emails you may receive, particularly the more serious Cease and Desist letters.
If you receive one of these emails, it’s important to verify whether it’s from a valid source and whether their claim is accurate. Many domain owner’s immediately hand domains over without verification simply out of fear, making them a victim of reverse domain hijacking.
The term reverse domain hijacking refers to the practice of acquiring domain names from owners by accusing them of violating trademarks with the domain name and demanding that the domain be transferred.
Companies or individuals that engage in reverse hijacking abuse the URDP process in order to steal domain names from owners who often don’t have the financial resources to defend themselves. UDRP arbitration generally calls for a lawyer and can sometimes end up in court if the hijacker continues to pursue your domain after losing the UDRP.
The only thing worse than an illegitimate suit filed against someone is a legitimate one. For example, when an unwary domainer registers a trademarked name without realizing it’s trademarked and then fills the parking page with competing ads. Most domainers know at this point that it’s useless to fight the trademark holder and often times simply hand the name over. If the trademark owner decides to file for damages though, things could really get messy.
A Domainer’s best bet is to avoid trademark infringement in the first place. A quick scan through the US Patent and Trademark Office  website will allow you to see any potential trademarks that you may be violating. If you’re registering a new name, remember that the Registrar simply tells you whether a name is available, not whether it’s trademarked. It’s your responsibility to ensure that the name you are registering is not trademarked.
Performing a trademark search is even more important for Domainers purchasing domain names through the secondary market. After all, just because the first domain name holder didn’t get hit with a lawsuit, doesn’t mean you won’t.
Frauds and Scams
There are several common frauds an scams circulating in the domaining industry that domainers need to be aware of and on alert for when it comes to their portfolios.
The biggest form of online fraud that domainers must watch out for is domain name hijacking, a practice in which a thief finds a way to transfer a domain name to themselves, often engaging in extortion when an owner attempts to get the name back.
Domain Appraisal Scam
Another big scam that domainers, particularly those new to the industry, should be aware of is the domain appraisal scam. How this scam works it that a domainer is approached by an “interested” buyer upon listing the name for sale. After numerous emails, the buyer says he’s ready to purchase, but he wants the seller to have the name appraised first by a specific company. What the buyer doesn’t tell you is that the appraisal company is his own and that he never intended to buy the domain. Instead, by luring you in with a potential sale, he is able to charge an extraordinary amount for a worthless appraisal.
Credit Card Fraud
Of course, domainers are subject to all the other types of fraud on the Internet, particularly credit card fraud. After you’ve listed domains for sale and the perpetrator buys them, you receive payment and then transfer the domains to the new owner. If you’ve been a victim of credit card fraud, the buyer, within the first 24 hours, has the credit card transaction reversed. At this point, you’ve lost both the payment and the name. Another form of credit card fraud occurs when a buyer uses a stolen credit card to purchase the domains.
Protecting Yourself from Fraud and Scams
The easiest way to avoid any scam is to keep your passwords secure, your software updated, and to use an escrow service when selling or buying domain names. Most importantly, be alert and aware of potential risks so that you can spot them before they result in a loss. While taking these precautions can help you avoid domainer danger, they can never be prevented completely. Every occupation has a set of risks and domaining is no different.