An operation that used deceptive spam messages and appeals to patriotism to sell Web addresses that don't work, including ".usa," has been shut down by a U. S. District Court at the request of the Federal Trade Commission. The court's action ensures that the defendants will not be able to reemerge by registering the same domain names offshore. The court also ordered an asset freeze to preserve money for consumer redress. Officials from the United Kingdom's Office of Fair Trading have been assisting the FTC on the issue of domain name sales and are investigating such activities in the U.K.
According to the FTC, the bogus businesses sold domain names ending with suffixes such as ".brit," and ".bet ." After September 11, the companies launched an aggressive spam campaign in the United States to advertise domain names ending in ".usa." Subject lines in their e-mail read, "Be Patriotic! Register .USA Domains." The text of the e-mail said:
"The latest domain name extension has arrived .USA!!! It's the fresh, new, exciting web address that is taking the world by storm. Who wants to be .com when you can now be .USA. Register your .USA domain name today exclusively at: http://www.dotusa.com."
The hyperlink connected consumers to a Web site where they were offered the advertised domain names for $59 each. The FTC alleges that the companies are not accredited domain name registrars, that the ".usa" domain names are not usable on the Internet, and that they probably never will be useable. In papers filed with the court, the agency said that many consumers had purchased multiple bogus domain names, and the defendants likely pocketed more than $1 million from their illegal scheme in less than a year.
"These spam scammers conned consumers in two ways," said J. Howard Beales, III, Director of the FTC's Bureau of Consumer Protection. "They sent deceptive spam, and they sold worthless web addresses from their Web sites. By closing down this operation we're sending a strong signal: We will not tolerate deceptive spam."
The FTC alleges that the companies violated federal law by failing to disclose on their Web sites that the domain names they were selling were not useable on the Internet, and by sending the deceptive spam. The FTC has asked the court to permanently bar the operation from deceptively selling the domain names and to order consumer redress. The defendants' Web site domain names are registered with U. S. companies. The defendants will be prevented from reestablishing the same domain names in another country because the domain names have been suspended by court order. The FTC complaint names TLD Network Ltd., Quantum Management (GB) Ltd., TBS Industries Ltd., Thomas Goolnik, and Edward Harris Goolnik of Finchley Road, London, England.
The FTC vote to file the complaint was 5-0. It was filed in the United States District Court for the Northern District of Illinois, Eastern Division, in Chicago, on February 28.
NOTE: The Commission files a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendants have actually violated the law. The case will be decided by the court.
Copies of the complaint and an FTC Consumer Alert, "What's Dot and What's Not: Domain Name Registration Scams," are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at https://www.ftc.gov/ftc/complaint.htm. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
(FTC File No. 012 3237)