A US District Court today ordered a halt to the illegal practice of Canadian companies who the Federal Trade Commission said deceptively posed as domain name registrars and sent bogus bills to thousands of US small businesses and nonprofit organizations for their annual “Website Address Listing.”
The FTC said many of the businesses believed they would lose their Web site addresses unless they paid the bill, so they paid but in most cases the defendants did not provide domain registration services, did not provide the “search optimization” services it claimed to provide, and bilked small businesses and nonprofits out of millions of dollars.
According to the FTC, since 2004, Internet Listing Service of Toronto has been sending fake invoices to small businesses, listing the existing domain name of the consumer’s Web site or a slight variation on the domain name, such as substituting “.org” for “.com.” The invoice appears to come from the businesses’ existing domain name registrar and contains terms such as “Website Address listing” and “Annual Website Search Engine Listing,” the FTC said.
The invoice also claims to include a search engine optimization service, according to the FTC.
Most businesses who received the “invoices” were led to believe that the defendants were their current domain name registrar and that they had to pay them to maintain their registrations of domain names. Others were induced to pay based on defendants’ claims that their Search Optimization service will “direct mass traffic” to their sites and that their “proven search engine listing service” would result in “a substantial increase in traffic,” the FTC said.
The FTC said that most consumers who paid the defendants’invoices did not receive any domain name registration services and that the “search optimization” service is ineffective and does not result in increased traffic to the consumers’ Web sites.
The FTC charged that the “invoices” represented that the defendants had a preexisting business relationship with the consumer. The “invoices” also represented that consumers owed money for the continued registration of their Web site names and that the defendants would provide continued registration services for consumers. The defendants also claimed that the “search optimization” service would substantially increase traffic to consumers’ Internet Web sites. The FTC alleged all that of these claims were false and violated federal law.
A federal district court judge in Chicago ordered a halt to the deceptive claims and froze the defendants’ assets held in the United States, pending trial. The FTC will seek a permanent halt to the scheme and ask the court to order redress to victimized consumers.
The defendants named in the FTC complaint are Data Business Solutions, also doing business as Internet Listing Service, ILS, ILSCORP.NET, Domain Listing Service, DLS, and DLSCORP.NET, and its principals, Ari Balabanian, Isaac Benlolo and Kirk Mulveney.
Domain Name registration problems have been an issue of late. Earlier this year a class-action lawsuit was filed against Network Solutions alleging the company had unfairly profited from its domain name registration business. The lawsuit, filed in U.S. District Court for the Central District of California, takes issue with a policy Network Solutions implemented in December. The company says the policy is intended to protect people trying to reserve a domain name, but others say steers business to Network Solutions. The company automatically reserves a domain name after someone merely conducts a search on Network Solutions' Web site. If someone goes to another domain name registrar just seconds later, the domain name won't be available.
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