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Judge halts domain registration scam

$4.26m in bogus renewal fees collected

Internet Security Threat Report 2014

A federal judge has ordered members of a Canadian operation to stop posing as domain-name registrars in scams that collected more than $4.26m in bogus renewal fees from unsuspecting consumers, small businesses, and non-profits.

US District Judge Robert M. Dow Jr. of the Northern District of Illinois also issued judgments of $4.26m against defendants Steven E. Dale, Isaac Benlolo, Kirk Mulveney, Pearl Keslassy, and a company called 1646153 Ontario. The judgements, which represented the total amount of consumer injury caused in the scam, were suspended for all defendants except Dale, based on their inability to pay. They will be required to turn over $10,000 to settle the charges.

The settlement puts to rest a complaint the FTC brought in 2008 accusing the defendants of sending unsolicited mail in which they posed as domain-name registrars who falsely claimed to have an existing business relationship with the recipients. Thousands of the letters claimed the recipients would lose domain name addresses they owned unless they paid renewal fees. The fake invoices included existing addresses belonging to the recipient, sometimes with slight variations, such as “.org” instead of “.com.”

Some of the notices also promised search engine–optimization services in exchange for the fee. Those who paid didn't see increases in web traffic.

Dow permanently ordered the defendants to stop misrepresenting that they have a pre-existing business relationship, or that they will provide domain-name registration services or SEO services. The order was issued in March, but only announced on Monday.

The FTC dropped charges against Ari Balabanian and a company called Data Business Solutions. ®

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