The Federal Court has ordered Domain Name Corp Pty Ltd and Domain Name Agency Pty Ltd to pay combined penalties of $1.95 million for scamming Australian SMEs (small and medium enterprises) with fake ‘renewal’ notices. The ACCC launched an action against these two ‘Domain Companies’ after sending some 300,000 misleading invoices to businesses that looked like domain renewal notices. But, in fact, these were for the registration of new domains. These fake renewal notices were misleading businesses and were in direct contravention of the Australian Consumer Law (ACL).
The Fake Domain ‘Renewal’ Notices
Why the ACCC commenced actions in the Federal Court and what was the ruling?
The Federal Court stated that the Domain Companies were making false and misleading representations to their customers and engaged in misleading and deceptive conduct. They targeted those individuals by capitalising on their lack of knowledge, awareness and understanding about the domain name system.
Between November 2015 and April 2017, the Domain Companies sent a series of letters to SMEs that were misleading customers into believing that they were renewing their existing domain names, but instead they were for the registration of new domain names, cost ranging from $249 to $275. As a result of this scheme, they made a revenue of approximately $2.3 million from 10,000 Australian SMEs that paid these illegal renewal notices. The Federal Court ordered that the domain registrars pay a combined total of $1.95 million in penalties for targeting and misleading SMEs about the domain renewal notices.
What other orders were made?
The Federal Court also ordered the sole director of both domain registrars to be banned for a period of 5 years and ordered to pay $8000 to the ACCC for his involvement. This injunction includes a requirement that any future domain notices sent must clearly state that they are not a bill and does not carry a requirement for any payments.
What SMEs should be aware of?
All SMEs should remain vigilant when paying invoices or renewal notices, especially if this involves the registration of a domain name. Never rush to pay for invoices but rather take the time to read them. This will ensure that SMEs are exactly aware of the charges that they are paying for. SMEs should also find a better way of managing their domain name renewals to take the proper precautions to ensure they are not being scammed.
How to Protect Yourself
Unsolicited domain name registration offers have the appearance of an invoice or renewal notice, but this letter is not a renewal, but rather registering for a new domain name. To ensure that you can protect yourself, you should make sure the business billing you is the same one that you’re familiar with. Also, have clear procedures for verifying, paying and managing accounts and invoices and limit the number of persons authorised to pay those invoices. Overall, SMEs should do their research to ensure they are paying for the correct invoices or renewals and to limit the number of people that can access these items.
Increasing awareness will ensure that thousands of Australian SMEs will become more vigilant when paying for these fake ‘renewal’ notices. This Federal Court order may serve as a warning to other domain registrars to abstain from beginning or continuing these practices, and provides some relief for Australian SMEs.
Let us know your thoughts? Are you aware of these domain renewal notices? Alternatively, contact a LawPath consultant on 1800 529 728 to learn more about obtaining a fixed-fee quote from one our network of 1000+ expert lawyers or to get answers to your legal questions.