I’ve spent the last two hours reading a thread on the DigitalPoint forum about a guy/group of guys who were scamming people out of the domains names.

Here is the summary of how the scam works: let’s say you have a domain name for sale. Someone makes you an offer and pays you with PayPal. After you received a payment you push the domain to the buyer’s domain registrar. The moment the domain transfer is complete, the buyer makes a PayPal claim and reverses the transaction. As a result, you are left with no money and domain.

Making a PayPal claim is quite useless as only the transfer of physical goods is covered under PayPal policy. The domain registrar would not be of a big help either as they were not involved in a transaction.

It appears that the scammers use GoDaddy registrar to make this work. I have no idea why GoDaddy is better for scamming than other registrars but no other registrar was involved in this type of scams so far.

So, when selling domains do not use PayPal. Use other online payment processors like escrow.com or moneybookers.com or any other that guarantee that the payment would not be reversed once made.

Read the thread on DP, it is quite interesting.

Nikolai

1. My advice to anyone selling domain names is to use the services of escrow.com unless the sale price is something they don’t mind risking a loss on.

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   Posted by The Wealthy Blogger | March 19, 2008, 9:16 pm

2. Thanks nikolai for the head up. Will be more careful of it. :) davcheong here from dp.

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   Posted by david cheong | April 8, 2008, 10:19 am

3. Perhaps, Godaddy is more well-known and hence, more popular? Maybe even a higher volume of transactions compared to other registrars?

   After all, when I did think about registering my domain, the first name I could remember was “Godaddy”.

   Posted by FoxTwo | April 16, 2008, 2:17 pm

4. Thanks for the info. Had no idea PayPal operated in this way regarding the delivery of non-physical goods. Could really be an issue when dealing with highly valued and rare domains.

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   Posted by Marty | May 31, 2008, 1:05 pm

5. Nice article.

   Posted by Cheap Last Minute Ticket | November 26, 2008, 4:59 am

6. Damn! I’ve been through this thing!

   I HATE THEEEM!

   Posted by Simmone @ Free Resume Templates | December 2, 2008, 7:25 am

7. It happened to be. Those people are so bad. Actually the Pay Pal should not allow the reversed transaction. If they allow the other innocent people are cheated.

   Posted by Microsoft SharePoint | December 20, 2008, 6:57 am

8. Thank for this post!

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   Posted by Jame | March 19, 2009, 9:46 pm

9. I think cash will be best choice for such sells. But perhaps it’ll be more dangerous :)

   Posted by Peter | April 13, 2009, 3:59 pm