Original published on The Register, 30 August 2002
The Office of Fair Trading has given a stern rebuke to the owners of companies that offered false domain names for $59 – and inadvertently given the green light to hundreds more Internet fraudsters.
TLD Network Ltd and Quantum Management (GB), located at 843 Finchley Road in London, have been “stopped from publishing misleading advertisements for website domain names that are difficult to view on the World Wide Web”.
Since June 2001, the companies have been selling .sex, .bet, .brit and .scot domains. Of course, these are not ICANN-approved domains and so can only be viewed as sub-domains or on alternative Internet networks. As such, people that forked out for a domain will have been surprised to find it didn’t exist and couldn’t be used.
Any consumers will also have been frustrated at not having a telephone number to call and a response rate to emails to rival Boo.com. Not that the OFT mentions any of this, nor does it account for the fact that neither company has made any attempt to make these domains available – unlike, for example, New.net, which enables a small browser download to make its domains visible.
Instead, the two brothers acting as sole directors of the two companies – [TG] and [EG] – have promised not to do it again.
Except of course there is no reason to believe them since the same two brothers, at the same address, except this time under the name TBS Industries were investigated by the OFT in 1997 and 1998 for deceptive marketing. They said a radar detector they sold would make cars “totally invisible to all major speed traps”. They pleaded guilty and paid a £3,000 fine.
You might think that selling domain names that don’t exist could be misconstrued as fraud. Not according to the OFT. But, hang on, its US equivalent, the Federal Trade Commission, takes a very different view of things.
In fact, it was thanks to the FTC that the OFT finally became aware of the scam. The [G]s’ mistake was to attempt to sell .usa domains to a patriotic United States one month after the New York terrorist attacks. When people realised they had been duped they complained en masse to the FTC.
On the 28 February 2002, the FTC went to court, succeeded in shutting down all 11 sites owned by the [G]s and froze all their assets. This temporary restraining order only stood for two weeks but by then it had shut the sites down for good and prevented the owners from owning any companies with those names again. The estimated $1 million they made has been kept back to pay back consumers who had “suffered substantial monetary loss and disclosed sensitive personal information”.
That restraining order was extended until the 20 August. And then, just 9 days later and nearly a year since it had become aware of the problem, the British watchdog, the OFT, proudly announces that it has used The Control of Misleading Advertisements Regulations 1988 to extract “assurances” from the [G]s not to do it again.
So elated was the toothless watchdog that even the Director General got in on the act, adding his quote to a press release saying: “It is important that consumers and businesses seeking domain names know exactly what they are buying and how accessible the domain names will be. This case illustrates that consumers can be protected wherever traders are based. The OFT will cooperate with international enforcement partners to achieve this.”
If the OFT’s idea of consumer protection is to wait four months for someone in the States to tell them about a scam, then do nothing for eight months while elsewhere they are put out of business and their assets are frozen, and then finally slap them on the wrist for nothing more than “misleading” advertising – well, then the UK is set to become a hotbed for Internet fraud.
Why didn’t the OFT do more? It does possess some strong powers, so why not use them? We tried to find out but it seems that none of the relevant people are in the office at the moment.