Watching out for Stolen Domain Scams

A domain scam has been roaming the internet for a while now that aims to trick domain owners into providing their account details into a faked GoDaddy.com page. The scammer then sells them off as fast as possible on any number of domain marketplaces.

Unfortunately it seems that it is back in circulation and catching people out.

How Does It Work?

This scam works like most other phishing scams.

In a nutshell, folk who have their contact details listed on the domain receive the fake GoDaddy.com email that sends them to a website with a GoDaddy.com look and feel.

Once the victim enters the account details, they may receive a standard “Thanks” message but the scammer now has their account details. As such, they can control the victims domain and thus, to a degree, their website.

The scammer then uses this information to meet any domain ownership validation controls on lists on domain marketplaces and looks for a quick sale.

What does it mean for Website Owners?

Anyone who owns a domain should be aware of this scam.

GoDaddy.com released an alert on this specific scam last year but also provided some warning questions that domain owners should be thinking about:

  • Where does the link take you?
  • What information are they asking for?
  • Is the web page Secure?
  • Is the email addressed to you personally?
  • Does the email read well?
  • Is the page a pop-up?
  • Is there an attachment?

You can read their How to Spot Email Scams post for more details.

What does it mean for Website/Domain Buyers?

Despite the warnings and tell-tale signs, some people do fall for this scam.

We have unfortunately had a handful of instances (a miniscule proportion of a percentage of domains listed on Flippa) of these stolen domains being put up for sale on Flippa using increasingly sophisticated measures to circumvent our alerts.

While we look at technical measures to see what we can do to address this (not an easy task when the scammer effectively has full access to the user’s domain registration account), there are a number of tell-tale indicators that should ring alarm bells for potential domain buyers on Flippa.

  1. The domain seems to contain a fully fledged website – legitimate domains for sale typically don’t have an abundance of content (ie they’re parked). If a domain for sale has a wealth of content or functionality, you should be questioning as to why it was not listed as an established website for sale
  2. The BIN price seems too good to be true – scammers are looking to sell as quickly as possible to avoid being caught. To do this, they set a buy it now price that will drive a quick sale. Any three-letter or popular dictionary word dot-com domain with a BIN below $5,000 should be looked at carefully
  3. Whois details have been updated in the last few days – the scammer will sometimes update the whois details with their own contact email. Click on the auction’s “View full WHOIS details collected at listing time” link to check this out. Note that scammers will not always alter these details so no recent changes is not guarantee
  4. Seller has only been on Flippa for a few days – the scammer has typically been banned from Flippa before so will set up a new account to offload their stolen wares. Note there are also a number of legitimate scenarios for this but it should still lead to further investigation.
  5. Large number of comments have been deleted – as more evidence begins to point to a stolen domain, Flippa users will start asking tougher questions in the public comments. Scammers will typically delete these comments to reduce suspicion however an auction with a number of deleted comments should instead raise suspicions!
  6. Seller requests payment via wire transfer (eg Western Union) – OK, so the above measures did not ring enough alarm bells and you won the auction. Scammers will typically propose wire transfer for funds exchange as these services do not provide recourse for the buyer once they realize they’ve paid for a domain they will never own. Escrow remains the recommended service for these transactions and, failing that, payment providers such as PayPal offer better security.

While the existence or absence of one of these indicators does not immediately define a seller as being legit or a scammer, it will hopefully trigger deeper investigation.

Massive thanks to the guys at ariyas.com for working with us on this.

Think there is more that can be done to identify stolen domains? Let us know in the comments below.


Image: alancleaver

Would You Buy or Sell Websites on eBay?

Would You Buy or Sell Websites on eBay?

Hardly a week goes by without someone on a forum, blog or social network asking whether or not it is worth selling or buying websites for sale on eBay.

Don’t get me wrong – I love eBay. I just sold a pair of old bedside tables on eBay for a good price and the buyer picked them up on the weekend. Great outcome!

However, while they are strong in some areas, it blows my mind how anyone can think that it would be a good idea to sell websites on eBay!

This screenshot of a recent listing of ebay.com for sale on eBay (400KB) is just one example of how unsuited the eBay platform is for websites.

There are furthermore a few key issues to consider based on the feedback we’ve had from Flippa users.

Why wouldn’t I advise anyone to sell websites on eBay:

For Website Buyers

  1. Reduced Confidence: No validation has occurred on eBay website listings to check that the seller actually owns the website being sold.  Listings don’t go live on Flippa unless they pass validation.
  2. Limited Search Refinement: Search refinement on Websites for Sale in eBay is focused on arguably irrelevant attributes such as Condition (new or used website anyone?), whether the seller provides free shipping, and the largely irrelevant “Location”. Website buyers on Flippa have the ability to refine by key website attributes such as traffic, Google/Alexa rank, site/domain age, revenue or domain.
  3. Limited Website Details: When arriving at an auction, prospective website buyers on eBay are not given readily available website details such as site age or search engine performance. In fact, most listings struggle to provide the website’s URL. Flippa only provides details specific for websites or domains.

For Website Sellers

  1. Auction Listing Process is Designed for Fridges: Sellers on eBay need to find the websites category before entering generic listing details. There is no ability to add attachments – except for the need to manually upload the website’s screenshot. Listing on Flippa begins with your domain and then only requests information specific to websites – we get a lot of information (including the screenshot) for sellers automatically.
  2. Fewer Qualified Buyers: General merchandise buyers looking for white goods that somehow end up on your website listing are not the types of buyers to whom you want to sell given the likely pre- and post-sale overhead.  Buyers on Flippa are only there to buy websites. We also empower website sellers to manually accept or reject bids on their listings to further qualify buyers prior to sale.
  3. Lower Sales Rate: Websites listed on eBay have a reduced chance of selling successfully. The guys at Go Beyond MLS did a study on website sales on eBay about a year ago and found a sales rate of less than 10%. Our own research shows that this has not changed much, while Flippa’s sales rate right now sits at 62%.

Any guesses on what the biggest difference is between websites for sale on eBay and those on Flippa?

Leaving the previous points aside, the biggest difference is that everyone working here at Flippa eats, breathes and sleeps websites – everyone from our executive team down to the guy who writes the blog posts. For us, not much else matters. As result, the biggest difference is that websites for sale on Flippa get the attention, exposure, and resources they deserve.

So while eBay are great for selling a lot of physical goods and doing some remarkable work in online-to-offline shopping and local commerce, it’s hard to accept that they’re the go-to destination for buying or selling websites—this remains a crown we hold dear here at Flippa, and something we work hard every day on retaining by doing more to connect website buyers with website sellers.

I work at Flippa (when I’m not selling household items on eBay) so admit that I may not be the most impartial author on this subject. Think we’re wrong or right? Tried to buy or sell websites on eBay in the past? Or, for that matter, on craigslist? We’d be very keen to hear your feedback in the comments below.

Why Porn and PPV Matter When Evaluating Websites for Sale

Why Porn and PPV Matter When Evaluating Websites for Sale

We’ve recently been in contact with a number of buyers on Flippa who have voiced concerns at the number of brand new, start-up websites for sale on Flippa with seemingly robust traffic performance.

One such buyer known on Flippa as CallMeFlipper suggests that while it is technically possible for start-up sites to get good traffic in a short period of time, some dishonest sellers may be resorting to PPV traffic to artificially inflate their traffic performance.

So What Is PPV?

Pay Per View (PPV) traffic is when the site owner pays for additional traffic to their site, most frequently via adult content sites, to boost their page views.

The Wall Street Journal ran a story on this a few weeks ago in the context of how this is used to exaggerate traffic claims to advertisers (non-WSJ subscribers can access the non-paywalled version at ITWorld.com).

In a nutshell, a web user (or in that case “adult content consumer”) goes to a website which automatically opens a stack of other windows for sites whose owners are paying for additional page impressions. The following image from the WSJ outlines this in more detail.

In the context of buying websites, PPV traffic can be used to artificially inflate a website’s audience. A less scrupulous seller may even preserve the PPV traffic for long enough to avoid subsequent charge-backs. At best, the new owner is left with a website that has no traffic. At worst, their AdSense account may become banned as ad networks such as Google are cracking down on PPV traffic sites.

How do we know this? Back in 2008, CallMeFlipper trialed PPV on one of his sites as a marketing tool. He was very surprised to see $100 in AdSense revenue hit his account within 24 hours. Surprise and delight turned shortly afterwards to shock when Google terminated his AdSense account. Wiser for the experience, he hopes that Flippa buyers and sellers can learn from his mistakes.

So How Do I Avoid Considering Websites For Sale That Are Using PPV?

While verified Google Analytics remains the only way to be truly confident about a website’s traffic claims, website buyers will need to look deeper to check for telltale signs that the traffic has been purchased.

As such, you should be concerned when stats report display any of the following:

  • The biggest traffic source is “Direct”. This is exceptionally difficult to achieve for a new site and could suggest that it is as a result of the aforementioned pop-up page load
  • The bulk of visits are by new visitors—how is a new site getting so many new visitors, and why aren’t they coming back? This is especially concerning when the site also relies on direct traffic—how does a new user know to come to the site directly if they’ve never been there before?
  • Low pages per visit and average time on site—if you were surfing the web and a bunch of sites popped up against your wishes, you’d typically shut them down in an instant. This is typical of PPV which results in only one page being viewed and time on site being measured in seconds

While different sites behave differently across these metrics, extremes such as those outlined above should raise alarm bells. For the sake of benchmarking, Flippa has nearly 10 pages viewed per visitor, a bounce rate of 30%, average time on site of over 10 minutes with one third of our users being new visits.

What if the website auction you’re looking at doesn’t provide verified Google Analytics, or the verified stats don’t include the metrics outlined above? In this case, it’s much more difficult to assess the legitimacy of the stats and you should only proceed if you are comfortable with the resulting risk.

Why Doesn’t Flippa Automatically Block These Listings?

There is unfortunately no technical replacement for due diligence. Flippa cannot simply block start-up sites listing on the basis that they have incredible traffic as they may be clean as a whistle. There are furthermore no APIs for us to access Google Analytics to automatically flag websites with metrics such as high bounce rates from direct traffic.

(OK, there is actually an API, but it provides no information about which site the measurements are for, so we’d be giving you false comfort in the case where multiple sites use the same Analytics code to bump up their results.)

Regardless, we hope posts like this go a long way in assisting website buyers in making informed decisions.

Oh, and before anyone asks: no, we are not planning on changing our no-adult-content website policy!

Used PPV for your website? Bought a website you suspect used PPV? Know of a website for sale in the Flippa marketplace right now that you suspect is using PPV? We’d love to hear about your experiences in the comments below.

Confidential Listings – A New Way to Sell Quality Websites

Recently we’ve had a few website sellers come to us saying they’d love to list on Flippa but they’re not entirely comfortable with everyone — maybe competitors or current customers — knowing their website is for sale.

Given the pivotal role of the website’s domain in our listings, this was not possible… until now.

Furthermore, a number of sellers have been requesting that buyers sign a Non-Disclosure Agreement (NDA) prior to asking questions or bidding. This is a handy way to qualify buyers while preserving trade secrets… and it’s something we’ve made simpler.

As of today, a website seller can choose to make their new listing confidential. This will result in the URL being hidden from buyers until the seller has approved the buyer’s signed NDA.

How It Works

For Website Sellers

When sellers create their listing, they can select the “Confidential Listing” option.

This will hide the URL and other site-revealing information such as the WHOIS, Ranking Keywords, Hosting and Wayback Machine details from everyone apart from the seller and approved buyers. Note that sellers can only define the website for sale as being confidential when the listing is created—it cannot be turned on or off once the listing is live.

The seller manages their NDAs via the “confidentiality agreement” link on the listing page.  From here, the seller can select to either use a default NDA provided by Flippa or upload their own version in PDF format prior to going live. Once the listing is active, the seller uses this page to approve or reject applicants.

Confidential Listings continue to appear for all searches and result pages such as Just Listed, Most Active, Browse, keyword searches, revenue/traffic refinements etc – but without their identifying information.

confidential-listing-example.png

For Website Buyers

Potential website buyers can view the NDA for a Confidential Listing via the “confidentiality agreement” link on the auction details page. After the website buyer has read and agreed to the NDA from this page, the website seller is notified and can approve or reject the application.

Approved buyers can then view all the listing details and submit bids as if it were a standard listing.

While public comments are not available for Confidential Listings at this stage, buyers can still send a private message to the website seller.

Who Should Use It

It is important to note that the Confidential Listings are designed specifically for websites where a public auction may devalue the site in question. They’re not for everyone.

To begin with, Confidential Listings require increased time investment to manage the list of approved NDA signatories while still managing individual bids. Furthermore, the NDA step means the listing is likely to attract fewer bids, but the bidders themselves will be higher quality.

This upgrade costs $100 on top of your listing fee to minimize abuse and ensure the feature is only used when required. As such, it may not be an economical add-on for low-value websites.

FAQs

What Happens to Due Diligence Information?

All due diligence details are provided where this does not give away the specific website. For example, the Alexa rank and related information are available, but the standard “more detail on this site” link does not appear until the user has been approved.

What Happens to Upgrades?

All Flippa upgrades remain available for Confidential Listings however some behave a little differently:

  • Tweet listing to @flippa followers: This will be in the usual format however the domain will be sent as “Hidden URL”.
  • Screenshot on listing row: If selected, this will display the Confidential Listing icon from the auction details page.

What Happens to Comments?

Public comments have been removed for Confidential Listings at this stage to remove any risk of the specific details of the listing being made publicly available. Concerned users can still report suspicious Confidential Listings using the standard “Report It” link if required.

What Happens When a Buyer Breaches the NDA?

The NDA is a legally binding document between the buyer and the seller. The obligation remains on the seller to enforce the NDA should any breaches be identified, though Flippa can provide information about when the agreement was formed. On the basis that a breach may constitute fraud, Flippa retains the right to suspend user accounts that are found to be actively seeking to compromise the Confidential Listing or NDA process.

Image: Sir Mo

This is arguably the biggest enhancement on Flippa so far this year – do not hesitate to let us know below if you have any comments or questions.

What is the value of “Potential Revenue” when it comes to websites for sale?

What is the value of “Potential Revenue” when it comes to websites for sale?

You don’t need to look far through websites for sale on Flippa to find a listing that mentions potential revenue or another “forward looking” claim about the value of the website.

This is understandable and can be legitimate, given that most buyers are looking to buy websites that represent opportunity.

If a website is making money today and key drivers such as traffic, engagement and CTRs are trending upwards, it’s probably reasonable to say that potential revenue is higher than actual revenue at the time of sale.

Where this becomes a problem, however, is when these claims rely on some future event or specific activity to be undertaken by the new owner—especially when the website has no real track record of attracting customers and monetizing this traffic.

Understanding Future Events

Future Events such as the site appearing on the front page of Google, being reviewed on Oprah or going viral on Twitter are not guaranteed to happen for any given site. Furthermore, these events are extremely difficult for any site owner to control. This creates a great deal of risk which needs to be taken into account as part of any website valuation.

The fact that such a future event probably won’t occur needs to be considered prior to bidding on a website, especially when it is the basis of claims for potential revenue.

Understanding Execution Risk

Execution Risk occurs when a site’s claim to potential revenue relies on the new owner undertaking a specific set of new tasks. No matter how competent the new owner might be, undertaking these activities may not yield the claimed “potential” results—even the best companies have trouble taking something from concept through to execution (think Cuil or Google Wave).

Activities such as getting more backlinks, more Twitter followers, more Facebook friends, email campaigning and implementing affiliate/AdSense monetization are all important. However the degree to which each of these will improve the website’s revenue position is almost impossible to determine beforehand. As such, any claims that they will create a certain amount of incremental revenue per month contains execution risk.

Naturally the execution risk rapidly increases with the complexity of the set of required tasks—adding Google AdSense is easier to nail than getting backlinks from a major site such as CNN.com or adding major new technical functionality to an existing website.

Understanding Guarantees

To address website buyers’ concerns regarding the reliability of potential revenue, a number of sellers have begun offering revenue “guarantees”.

Examples might include a refund if a site does not meet revenue expectations.

Any buyer looking to purchase a website based on such a guarantee needs to understand what is being refunded (ie purchase amount as well as Flippa buyer success fees?), the conditions for the refund to be claimed (eg if website does not generate $100 in the first month) and the conditions being placed on the buyer (eg guarantee is voided if buyer changes hosting service).

Also keep in mind that any guarantee is only any good if it can be enforced. Flippa can’t stand behind these guarantees so, assuming the worst happens, you won’t have any obvious channel to help you get your money back.

Flippa’s Position

As with the age-old wisdom that a bird in the hand is worth two in the bush, so it is when buying a website where actual revenue is a much greater indicator of value than any claimed “potential” revenue.

Flippa’s terms of service are extremely strong on ensuring a clear distinction between potential and actual revenue. We act swiftly on any listings where we learn of the seller not making this distinction clear or where claimed revenue is found to be bogus.

Where the revenue is potential, buyers need to conduct intensive due diligence on the strength of the statements being made. This includes understanding the traffic volumes, CTRs and sales metrics required for potential revenue figures to be achieved.

As for “guarantees”, be wary of both accepting and providing them. We won’t be able to enforce a guarantee—so don’t make buying decisions based on these potentially empty words.

And for sellers. Providing guarantees leaves you open to buyers complaining that you’re not following through. If we can see that you’ve provided a guarantee, and the buyer is complaining, you’re likely to get a black mark against your name. Don’t provide guarantees unless you’re really sure all your customers are 100% happy, all the time.

How do you treat “potential revenue” when buying a website? Have you ever bought a website with potential revenue and seen it fully realized? Have you bought a website with a revenue “guarantee” and how has it worked for you? Let us know in the comments below.

Image: renjith krishnan