20 October 2007

Domain Appraisal Scam

Like many webusers I sometimes have domains that are yet to be developed or which I have decided not to develop for one reason or another. Recently I decided to park a small number of domains at Sedo until I could get round to developing them or to look to the possibility of selling them. I hadn't used their parking service before and it seems a reputable operation.

Being scammed in the process of parking and selling a domain name was not something that I had heard of before so I wasn't really alert for this. The domains that I parked were mostly fairly newly registered and undeveloped so I wasnt expecting to recieve very high offers for any of them.

So imagine my surprise when I recieved the following by email;

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from : TGN Consulting McGovern@toughguy.net

Hello,We are interested in "somedomainname"
Your name was listed in online auction. What is your price for the name?
Our company is involved in software development/support business. Now domain invetsing/reselling is just an additional direction of our investment strategy.
Looking forward to do business with you.
Regards,
Andrew McGovern
PresidentTGN Consulting
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Ok I thought - this is good, someone interested in one of the domain names. I decide to try to check out who they are and so as not to appear over keen I just send a holding reply and say I will get back to them.
Meantime I discover that the email has originated from a proxy email service called toughguy.net. Note the similarity between this name and the name of the company TGN Consulting. I also check the register of companies and sure enough there is a TGN Consulting registered with a London address.

I then recieve this;

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from : TGN Consulting McGovern@toughguy.net

I need to know the lowest price you can
accept.
What is your price range: $10,000 or $15,000 or even
higher?
I'm sure it will take a lot of time and efforts to find someone
who will offer you more.
Please send your answer to me as soon as
possible.
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Now this is an undeveloped and newly registered domain name remember. The figures he was quoting were vastly more than I had anticipated selling for. But hey I am human - and he had got my attention. Which is of course exactly what he was trying to do.

At this point it is sounding too good to be true. At the same time I am not an expert in the domain name market so I think to myself - hey I am going to look really stupid if this is genuine and I blow it.
So I decide to be fairly measured in my reply. I am also a little surprised that the expression of interest has not come through Sedo itself. I am a little suspicious so I decide also to reinforce that I would want any sale handled through Sedo. Meantime I start a search for scams relating to the sale of domains.

Here is my response;

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I have not fully appraised the domain http://allsxy4u.com/ as yet but you are within the range that I had anticipated. I may consider a lower end bid for quicker turn around however.

My prefered route for handling bids will be through Sedo. I have only just registered there however and am still getting to know their system.
My understanding is that once an initial bid is formally recieved an auction would be triggered - I assume that you are happy to handle negotiation through that route?

If you are trying to build a premium domain portfolio I have recently listed the following additional domains through sedo.
>>>

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He responds promptly but I notice that he doesn't actually address my question directly about handling any sale through Sedo. Instead he raises the subject of appraisal of the domain name.
By this point I have found at least one reference to scams around the sale of domains and in particular around the appraisal of domain names.

He responds:
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from : TGN Consulting McGovern@toughguy.net
This is a regular practice to provide buyers or resellers with professional
and independent valuation. Serious investors must be sure in your price.
Without it they risk to overpay.
Anyway, you won't be able to sell without professional appraisal.
Of course, serious investors cannot accept auto-generated services. They need an accurate valuation made by humans not scripts.
--------------------------------------------------------------------------

Well of course they would want to properly appraise the domain - particularly if they are talking 10k to 15k!
However notice that he is already beginning to put some constraints on the type of appraisal when he talks about "investors cannot accept auto - generated services" and an appraisal by humans. Sedo of course offers appraisals.

By this point I am almost 100% certain that I am dealing with a scammer.

So I respond;
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I am considering using the Sedo appraisal service- which I have
not used before. I assume you would be using the same appraisal service. Do you
want to suspend discussions until that point? I have had a couple of other
expressions of interest but no firm bids.
--------------------------------------------------------------------------

I know what to expect from him now and he does not disappoint. He of course doesn't want to use Sedo - because he has his own domain name appraisal services that he has either set up or has signed as an affiliate for.
His response:
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from : TGN Consulting McGovern@toughguy.net

Sedo is a good broker and we can use it for transfer/transaction.

Unfortunately , Sedo is not acceptable as an appraiser because your names are listed with them and they are not independent. They are interested in earning 10% commission on every sale. I need appraisals from a company which is not interested in selling your domains.I heard many appraisal companies often made inaccurate appraisals. So I cannot accept appraisal from each and every site. I will only accept appraisals from independent appraisal companies I know and trust.



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Its clear of course that he is going to try to get me to pay for an appraisal and the bait for this is his ridiculously high initial suggestion of 10k to 15k for the domain name. The scam works by dangling this bait and then manoeuvring the mark into agreeing to pay for an appraisal. I decide to play along but make him spell it out.

My response;
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You are of course free to use whoever you wish to use for your appraisal. I would entirely understand that you would wish to obtain an appraisal that you
have confidence in.
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He forges on and has to deal with my assumption that it will be him that will pay for the appraisal ( he's the one doing the buying remember)

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from : TGN Consulting McGovern@toughguy.net

It's a big risk to proceed without professional valuation. I already spoke to industry experts and they prohibited me to do business without valuation..

Sorry, but it's difficult to understand your position.

As a seller, you can use a valuation certificate to sell names to other buyers. I cannot do the same because I don't keep control over your domain.I'm still interested in your domain. Hope you'll change your position. I simply don't want to take additional risks.Thank you for understanding. I'm looking forward to do business with you

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Sorry pal but that's not my understanding at all. If you want to buy my domain then the money for getting an appraisal is very small beer compared to the price you are offering me. if you are so keen on this domain why would you be haggling trying to get me to pay for the valuation when I have already told you that there are other parties interested. Doesn't smell right at all.
However I want to find out how he will play this one out so I tell him that I am "content for another appraisal to be sought" and ask him what firm he has in mind.

His response;
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I researched several companies and here are the results:I wanted to use Afternic.com, but their service is questionable after all.Just read this:http://www.igoldrush.com/links3.htm"Capsule Review: After lots of complaints, Afternic is no longer a recommended service. We will re-review the service in the near future."Another complainthttp://www.out-law.com/page-1630So we should avoid Afternic.com.The same is true for GoDaddy and SEDO. Their services are not manual since they are cheap.

Nobody will do a research for several bucks. They are just collecting money using their well-known names.I asked about other reputable appraisers in a forum. Several experts recommended me DomainSecondHands' appraisal service -http://www.domainsecondhand.com/appraisal.htm as a fast, accurate and non-expensive (about $70 or something like that) manual service.I also trust the manual appraisal service from http://www.domainmart.com/ but it's very expensive - $200/hour. This service was also recommended by many people. If you can afford $200 DomainMart.com's fee it would be great. They also provide cheap automated service but it's not acceptable.


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Wow now there is a surprise. He has reasons for discounting any other appraisal services other than the ones he wants me to use. He also covers himself by not just recommending one but by giving me a choice. He makes the $70 one sound cheap of course by referring to another dearer one. Just in case he assumes I will go for the cheaper one I try to make his life difficult for him by suggesting the dearer one.
I also want to try setting him up to see if I can scam him back so I point out that I have already paid out for an appraisal.

My response:
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I assume that you will probably want the appraisal to be from DomainMart? I note that its is more expensive than the other one but given that we may be talking in the region of 10k then perhaps it is not that expensive.
Let me know. I do have an appraisal from Sedo already but I understand that you are feeling that this is not independent enough for you. I am obviously keen to ensure that you are satisfied with the arrangements.
-----------------------------------------------------------------
He then responds quickly saying that he will accept either appraisal service

So I respond;

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Ok then I think we can go ahead. I have already had appraisal through sedo for this domain so any further appraisal would be additional expense for me. I am ok with doing this and purchasing an appraisal. I am prepared to go for the better quality appraisal but feel that I need some token of your good faith in this - ie to confirm that you are genuinely interested.

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I have decided to try to get him to deposit a small amount of money in my paypal account as an expression of good faith. I am not hopeful that he will agree to this because scammers are very alert to scams. Sure enough his response is a simple one liner

"I am interested to see independent appraisal results"

Sure you are pal , sure you are. I really dont believe that your only interest here is to earn an affiliate fee from me ordering a domain name appraisal from one of these sites. Sure I don't.
I have spent enough time on this so lets see how keen he is.
I respond;
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I think its only fair to let you know that I have had another expression of interest in my site. The other party states they will not accept appraisals from the sites you recommend and that they will recommend their own sites to me.
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I wonder if this might make him think that some other scammer has hold of me - but that is the last I hear from him.


So what do you think? Did I blow the chance of a lifetime or did I manage to body swerve a domain name appraisal scam. I have little doubt in my mind.

Remember - when you are selling a domain name it is up to the buyer to satisfy themselves of the worth of your domain name. A domain name at the end of the day is worth what someone is prepared to pay for it. No more and no less.

If you are selling domain names watch out for scams like this!

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2 comments:

Alex said...

nice one :)

psweezy said...

He tried to get me too. same appraisal website and all. 5,000 dollar offer. His email was eliteinvestments.net ... the web site just looks shady.... the address on the website led to some mountains in Britain. HAHAHA