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Huge Penalty For Australian Domain Scam Perpetrators

June 18, 2018

Australia's Federal Court has ordered two domain name companies pay combined penalties of $1.95 million for breaches of Australian Consumer Law.

Last week we mentioned an ongoing case concerning the Australian Competition & Consumer Commission (ACCC) taking action against the companies in relation to their sending out of hundreds of thousands of notices to Australian registrants. These notices were alleged to look like domain renewals, but were instead applications/invoices for new names that the victims may not want or need; with this point being buried in the fine print.

The ruse netted the companies an estimated $2.3 million.

The Federal Court has determined the companies, both with the same sole director, "made false and misleading representations and engaged in misleading and deceptive conduct in sending these notices." As well as the hefty penalties, the Court disqualified the director from managing a corporation for five years.

While the judgement will no doubt give those considering carrying out similar schemes pause for thought, registrants should still be very careful when receiving what appears to be a domain name renewal notice to ensure it's authentic. When in doubt, the registrar managing the name should be contacted. 

"These sham operations target small businesses, capitalising on a lack of understanding of the domain name system or a busy office environment," said ACCC Acting Chair Delia Rickard. "We encourage businesses to be vigilant when paying invoices, especially if it is for a domain name registration service."

In the past, overseas parties have also sought to fleece registrants in Australia - and being beyond our borders it can make things more difficult for local authorities to pursue such cases. These instances have often involved registering new names in extensions that would be of little to no value to Australian businesses with a customer base that is solely Australian.

These scams have been all too common over the years, and will continue to be attractive to unscrupulous parties while registrants fall victim to them.

In other recent news from the ACCC, the Commission released its Targeting Scams report last month. It states scammers skimmed nearly $4.7 million from businesses in 2017, a 23 per cent increase compared to 2016. The proportion of this related to domains names wasn't clear.

Related: Domain Name Security Tips.

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