The Federal Court has penalised two related companies, Domain Corp Pty Ltd and Domain Name Agency Pty Ltd (the Domain Companies), for scamming Australian consumers and small business owners out of a total of $2.3 million.
During a period spanning from November 2015 to April 2017, the Australian Competition and Consumer Commission (ACCC) had received a multitude of complaints against the two Domain Companies. During this period, over 300,000 unsolicited notices were sent to businesses requesting renewal of domain names.
However, while these notices appeared to be renewal notices for existing domain names, they were actually notices for the registration of new domain names. This resulted in many businesses unwittingly signing up for a new domain name ending in a ".net.au" or a ".com" suffix that the business may not have needed or wanted. The Court noted the fine print disclaimer contained in these notices was easily missed by someone reading the notice.
The cost of registration and purchase of the new domain names ranged from $249 to $275.
The Court found that by sending the unsolicited notices the Domain Companies had engaged in misleading and deceptive conduct. The two companies were ordered to pay combined penalties of $1.95 million due to these breaches of the Australian Consumer Law. The significant size of the penalties reflected the scale of the scam, both in terms of notices sent and the monies obtained.
The sole director of both companies, Mr Steven Bell (also known by the name Steven Jon Oehlers) was also found to have knowingly participated in the misleading conduct. The Court disqualified Mr Bell from managing a corporation for five years and ordered he pay $8,000 in costs.
Mr Bell and the two Domain Companies were also restrained for three years from sending notices to businesses relating to registration of "substantially similar" domain names without explicitly stating, "This notice does not relate to the registration of your current domain name. This is not a bill. You are not required to pay any money".
According to the ACCC, nearly $4.7 million from Australian businesses was lost to scammers, a 23 per cent increase from 2016 figures. Small businesses with less than 20 staff were particularly targeted by these scams, accounting for more than 50 per cent of ACCC reports.
Domain name scams are a common method of scamming consumers and small businesses. Another similar scam involves the sender claiming another company is seeking to register the same domain name as one owned by the business, but the domain name registrar is providing a brief window to secure the domain name first. The registrar will often request immediate payment to hold onto the domain name.
Business owners should be vigilant when paying domain registration invoices and should check that the notice applies to a renewal of their proper domain name, particularly those who have received a renewal notice for a ".com" or ".net.au" domain name.
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