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4 Common Scams and Avoiding Them When Selling a Website

Discussion in 'Site Flipping' started by bryanon, Oct 4, 2012.

  1. bryanon

    bryanon Executive VIP

    Oct 16, 2009
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    Hey all,

    Since scamming and fraud is a major issue in this industry I decided to post this quick piece I had written up for another project for all of you to benefit from.

    Note that, while the main target for scam and fraud attempts is obviously buyers, this how-to is for the sellers of websites, as there's an increasing number of fraudsters out there targeting sellers, rather than buyers.

    The good news is that most of these fraud attempts are very easy to see through (and avoid), and going through the below list of most common scams will be enough for most of you to keep yourself absolutely safe from fraudsters.

    1. Offering to pay either fully or partially after the transfer takes place

    This is by far the most common scam sellers (especially those who are new to the industry) are vulnerable to. There are two possible scenarios here, the more common of which is convincing the seller to transfer the website and the domain name first, and get the payment for it afterwards. As you would expect, the scammer will disappear as soon as they?ve secured the ownership of your website and you will never see your property, nor the money ever again. A less popular version of this scam is offering to make a partial / goodwill payment first before the transfer, then changing the ownership of the website and paying the rest afterwards. Scammers offer this initial ?deposit? payment in order to gain the seller?s trust (a scammer wouldn?t offer you to pay money first, right?) but in reality this is all they will end up paying for the site, as similarly to the first scenario they will disappear as soon as the site has been transferred and end up getting the website for a fraction of what it?s worth.

    There are two things that you can (and always should!) do to avoid either of the two scenarios above happening to you:

    Firstly, you should only deal with buyers who seem trustworthy and do some initial vetting before you agree on a deal. A general rule is that if something seems dodgy or suspicious about a buyer then 9 times out of 10 there?s a good reason for this suspicion. I fully understand that it may be difficult to pass on someone who might just be the buyer you?re looking for without being 100% sure that they don?t intent to follow through with the deal, but if there?s one thing I?ve learnt during the years of being in this business it is to trust my gut feeling when it comes to suspicious people and end all negotiations then and there as soon as I see any red flags.

    Secondly, you should NEVER agree to use unsafe payment methods (which includes all payment methods where a trusted 3rd party Escrow service isn?t involved). If you use a third party service to handle the transaction then you automatically protect yourself fully from any of the above, as your website remains safely in your position until the full payment for it is secured.

    2. Escrow Domain Ownership Scam

    This scam isn?t extremely popular (mostly due to the fact that the fraudster would have to ?freeze? the full price of your property and most can?t ever afford it) but it can also result in you losing both your website, as well as your money, so it?s definitely worth mentioning and taking precautions.

    In this scenario, the ?buyer? will agree with you to use the services of an Escrow company (such as Escrow.com) and transfer the purchase price as a legitimate buyer would. Once the purchase price is transferred and secured by the Escrow firm, they request you to transfer the ownership of the property to them (again, exactly as a legitimate buyer would). But then it gets nasty. What they do right after they?ve secured the ownership of the domain name is they change back the domain name registration details to what they were before (when it was in your position) and proceed to tell the escrow company that the ownership change never happened and they should revert the transaction.

    While most Escrow companies nowadays are aware of this scam and have means for tracking whether the change in domain ownership did or didn?t happen, it is still good practice to take screenshots of the ?domain pushing? process so that you could send them to the escrow firm in case of any disputes.

    3. Google Adsense Revenue Scam

    In this increasingly popular scam the fraudsters actually use reverse psychology and make you believe that they need to verify your legitimacy.

    What they do is very simple ? having agreed on the deal, they request you to change the Google Adsense (or indeed some other advertiser?s) ad block codes to theirs, in order to ?verify that the declared earnings are legit?. They then have your website?s earnings go to their pocket for a couple of days (or in some cases weeks or months), only to disappear when you?ve noticed that you?re not dealing with a legitimate buyer.

    Luckily though, all it takes to avoid becoming a victim of this scam is never agreeing to any requests like this. By using an Escrow service, the buyer will have time to inspect the property (and verify the earnings) while the funds are in Escrow and not released to you yet, and there are also very good means (which I have discussed earlier within the course) of providing earnings proof without having to switch around the Ad Block codes.

    If a buyer is insisting on switching the ad codes then it?s time to find a new buyer as 99 times of 100 you?re dealing with a fraudster.

    4. Reverse-able Payment Methods

    Last but not least, you should never accept a payment using any payment methods that support reversing or disputing payments, the most popular of which being PayPal.

    While a proposal where the buyer sends you the full amount first and you need to only transfer the website after you have the funds may seem very attractive and safe, this isn?t the case at all. Some of the most common payment methods are in fact extremely unsafe. The main ones are PayPal (where it takes 3 clicks to dispute a payment) and Credit Card payments. If you agree on doing the deal through any of such payment methods then you?re leaving yourself HIGHLY vulnerable of getting scammed, as not only can the fraudster simply file a dispute/chargeback and get back every penny they paid you (while keeping the website to themselves as well), they can also use stolen PayPal accounts or Credit Cards, in which case the payment will get reversed once the true owner of the card becomes aware of it.

    In the very rare cases where I?ve had to use one of the payment methods mentioned above, I have agreed to a 90-day hold (ownership of the domain name gets changed only after 90 days has passed from the purchase date), as this is generally considered a safe time frame, after which it?s very difficult to reverse a payment.

    Take care and stay safe!

    • Thanks Thanks x 4
  2. MickMcG

    MickMcG Power Member

    Feb 24, 2011
    Likes Received:
    thanks for the info bryan!

    just a note about point 4, credit cards can be charged back anywhere from 6 months to 2 years depending on the bank, u can help avoid this type of scam by using a service that has verified by visa or mastercard secure service as part of their payment gateway, as those services require the owner to use a password that they have set up with their bank and the bank treats this the same as a PIN number, thereby placing the onus of responsibility on the cardholder to prove they 'didnt' place the order, rather than the recipient of the payment to prove the cardholder 'did' place the order (which is almost impossible).
    • Thanks Thanks x 1
  3. bryanon

    bryanon Executive VIP

    Oct 16, 2009
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    Yep, this depends on the jurisdiction, bank and the exact chargeback code used. While in most of Europe the time frame is 3 months I've also heard of instances where a chargeback has been filed even a year after the initial purchase.

    And as MickMcG said - it's always a great idea to use a card processor that uses verified by visa and mastercard secure service, as well as has a proper fraud prevention system in place.