Fake Domain Sellers Nailed

The FTC wins a settlement in a scam involving the sale of phony .usa domains in a spam campaign that capitalized on American patriotism after 9-11.

by Beth Cox of internetnews.com [December 4, 2002]

A handful of companies accused of selling phony domain names such as .usa have agreed to a settlement with the Federal Trade Commission (FTC), which had accused them of operating a scam that may have taken as much as $300,000 from consumers.

Sophisticated users, of course, would not be caught by anything like this, but it's the constant stream of newbies that has spurred the Internet's growth. The scam capitalized on Americans' sense of patriotism after the terrorist attacks on the United States.

The FTC said the settlement will bar the defendants from misrepresenting the usability of domain names and prevent the companies from selling their customer lists.

The government alleged that after the events of Sept. 11 last year, the companies launched a spam campaign to advertise .usa domain names. Subject lines in their e-mail read, "Be Patriotic! Register .USA Domains." A hyperlink in the e-mail connected consumers to a website where they were offered the advertised domain names for $59 each.

.brit and .scot domains also were being sold and were equally unusable. The defendants will turn over as much as $300,000 being held in merchant accounts for consumer redress, the FTC said.

The settlement involves TLD Network Ltd., Quantum Management (GB) Ltd., Quantum Management U.S. Inc., TBS Industries Ltd., and Thomas Goolnik as an individual. The FTC said that redress payments will be available to consumers in the UK and other countries, as well as the United States.

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