Last Friday, the Australian Competition and Consumer Commission (ACCC) instituted proceedings against two domain companies, Domain Name Corp Pty Ltd and Domain Name Agency Pty Ltd.
Background
The competition watchdog alleged the domain companies engaged in misleading or deceptive conduct and made false or misleading representations to Australian businesses about the domain name services they offered.It is alleged, businesses were told they were renewing their existing website domain names. However, this was not the case. Instead, they were being sold new domains at the price of $249 to $275 through the issuing of a letter that looked like a renewal invoice.
ACCC Deputy Chair Dr Michael Schaper said in a media release “businesses were signing up for a new domain name ending in either a .net.au or .com” and unnecessary associated services. As a result, the domain companies received a whopping $2.3 million from recipients.
From November 2015 to April 2017, the domain companies sent out approximately 300,000 unsolicited notices to businesses. This immediately caught the attention of the ACCC who published on its Scamwatch website a warning about unsolicited domain name registration offers. Ultimately, unsolicited domain name registration offers are considered a type of false billing scam.
In 2016, the ACCC alerted businesses about letters containing invoices that state ‘a domain name is available’. At this time, more than 14,5000 individuals reported a combined loss of more than $650,000 to false billing scams. In response, the ACCC is seeking declarations, injunctions, pecuniary penalties, corrective advertising, disqualifying orders against the sole directors of the domain companies and costs.
What Are False Billing Scams?
Basically, false billing scams are requests for you to pay fake invoices for directory listings, advertising, domain name renewals or office supplies that you did not order. Your business may receive an invoice, letter or invitation to be listed in a trade directory or, like in this instance, to renew your website domain name.
For a real life example of a false billing scam, check out Is It Legal For Businesses To Send Advertisements In The Form Of A Bill?.
Types of false billing scams
There are three types of false billing scams:
- Domain name renewal claims – for example, a sender may send you a letter informing you another company is seeking to register the same domain name, but they are giving you the opportunity to secure it first. Further, they may threaten that your domain name will end if payment is not made immediately.
- Payment redirection scams – for example, a scammer may pose as one of your regular supplies telling you that their banking details have changed.
- Office supply scams – For example, you receive a phone call claiming to be your regular or new supplier. The person tells you about an offer that is ‘special’ or available for a ‘limited time only’.
In order to avoid falling victim to these scams, there are warning signs you should be aware of:
- You receive a letter or an invoice demanding you pay for a domain registration or renewal. The renewal fee may be much higher than usual or be registered with a different company. Beware if the domain name is similar to your actual domain name but has a different ending.
- You receive an invoice for goods or services you did not order or someone posing as your regular supplier calls you offering goods you have not ordered before.
- One of your employees might be offered a free gift by someone you have never heard before. Then the gift arrives with other goods your employee did not order.
Key Take-Homes
As a business owner, there are ways you can effectively protect your business. The ACCC recommends:
- Do not agree with any business proposal on the phone. Instead, ask for an offer in writing. If you are unsure, it is best you get into contact with a business lawyer who can provide you advice.
- Always check goods and services were both ordered and delivered before paying an invoice. It is important to always read the fine print carefully.
- Try to limit the number of people in your business who are authorised to make orders or pay invoices.
- Make sure the business billing you is the one who normally deal with.
- Always contact your supplier to confirm if their usual bank account details have changed.
If you find you have received an unsolicited letter, invoice or email that looks like a renewal invoice, you should contact IP Australia.
Final Thoughts
As a business owner, you cannot afford to have problems with your business’ domain name. Let the ACCC action be a reminder to businesses of the importance of shopping around for a new domain name. It is recommended you do your homework on fees and providers. If you are looking to register a .com.au domain, you must register for an ABN first.
Let us know your thoughts on domain businesses offering Australian businesses unsolicited domain name registration by tagging us at #lawpath or @lawpath.
