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US Court Disconnects Canadian Domain Name Scammers

Posted by kdawson on Tue Jun 17, 2008 01:34 PM
from the stop-it-this-time-we-mean-it dept.
Government The Courts The Internet News
coondoggie writes "A US District Court today ordered a halt to the illegal practice of Canadian companies who the Federal Trade Commission said deceptively posed as domain name registrars and sent bogus bills to thousands of US small businesses and nonprofit organizations for their annual 'Website Address Listing.' The FTC said many of the businesses believed they would lose their Web site addresses unless they paid the bill, so they paid but in most cases the defendants did not provide domain registration services, did not provide the 'search optimization' services it claimed to provide, and bilked small businesses and nonprofits out of millions of dollars."
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Submission: Court disconnects domain name scammers by coondoggie (973519)
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  • Frozen money! (Score:3, Interesting)

    by Anonymous Coward on Tuesday June 17 2008, @01:40PM (#23827689)
    A federal district court judge in Chicago, Robert M. Dow, Jr., ordered a halt to the deceptive claims and froze the defendants' assets held in the United States, pending trial. The FTC will seek a permanent halt to the scheme and ask the court to order redress to victimized consumers.

    Lesson is? Don't store money in the US if you are (allegedly) committing crimes in the US.

    I'm trying to get outraged but the US only affected US assets. Something within its Jurisdiction.
    • Well, we ought to be careful here. Depending on which companies were bilked, GWB might decide to go to war with Canada to redress the issue. Weapons of Mass Cash Dispersal and all that.
  • its amazing people actually fall for that bulls***

    i really must be in the wrong business. i'm thinking about this whole "business plan" concept wrong. i'm thinking "what do people want and need and how can i give that to them better than the competition"

    i should be thinking "how can i prey on stupidity and fear of authority"
  • ordered a halt to the illegal practice

    So basically the courts ordered someone to stop breaking the law? Yea, that's gonna change their whole attitude.

  • Summary is horrible. (Score:3, Informative)

    by Anonymous Coward on Tuesday June 17 2008, @01:44PM (#23827771)
    First off it wasn't a US action, it was a joint law enforcement effort, Some dips are trying to use an international border to dodge law enforcement and got caught at it.

    Second nothings been disconnected, a US judge froze the companies US assets, a Canadian court needs to seize their Canadian assets.

    This is not a case of the US trying to impose its laws on Canada again, the bogus domain name companies are committing fraud and thats illegal anywhere you go.

    I don't know why this article is even on slashdot, its not news. Canadian and US authorities cooperated to catch a crook who tired to use the border to avoid getting caught. Happens all the time.

  • The stupidity tax really bites hard (Score:3, Insightful)

    by damburger (981828) on Tuesday June 17 2008, @01:50PM (#23827861)
    Especially if you send money to random people who ask for it without checking who they are first.
    • The thing about the "stupidity tax" as so many call it is not that it harms the stupid, it is that it rewards the corrupt.

      You can laugh at the people who fall for things like this and pat yourself on the back all you like, but it is wrong. It isn't helping society. It isn't weeding out the weak and stupid. It is rewarding evil.

    • Try running a business (Score:5, Informative)

      by Solandri (704621) on Tuesday June 17 2008, @02:37PM (#23828619)

      Especially if you send money to random people who ask for it without checking who they are first.
      That works fine if you're paying your dozen monthly personal bills sent to your home. It's totally different if you're running a business. If you're lucky, you only have 50 monthly bills. More likely you have 100-200. Many vendors are used sporadically so their bills will be unfamiliar. And the person paying the bills wasn't involved in purchasing from the vendor so even the vendor name may be unfamiliar.

      It's the reason large companies use purchase order systems. But for many small/medium businesses the extra overhead of purchase orders isn't worth it, and so they become vulnerable to this type of scam.

  • bilked small businesses and nonprofits out of millions of dollars

    Why bother? It's probably Canadian just dollars...

  • Network Solutions (Score:4, Insightful)

    by N8F8 (4562) on Tuesday June 17 2008, @02:01PM (#23828039)
    Network solutions sends out bogus bill-looking mail too to registrants.
  • Now if only the Canadian government would do the same thing up here.

  • Canadian Companies (Score:3, Interesting)

    by whisper_jeff (680366) on Tuesday June 17 2008, @02:14PM (#23828253)
    I haven't read the article, but I'm going to go out on a limb and guess "Canadian companies" is used loosely since it's illegal to charge for a service and not provide it, even in the frozen, barbaric north. I suspect "Canadian companies" is being used rather than "illegal scammers that happen to operate out of Canada." Then again, I didn't read the article so...
  • heh, these guys send me a couple of their "re-registration" notices every year around that time. slimy, but illegal? how are they any different from the "renew you automobile warranty" letters i still get every few months?
    • They're probably not any different, but that doesn't make them legal. Charging people for a service you don't provide is, the last time I checked, fraud.

  • An oldie but goodie (Score:3, Interesting)

    by Happy Lemming (918671) on Tuesday June 17 2008, @02:22PM (#23828387)
    Long ago, we used to get official-looking bills for listings in a worldwide Telex directory, for several hundred dollars a year. They were mailed from somewhere in Europe, I think, but the bills that reached us went straight into the bin. Looks like the scam has been updated.
  • These's guys have doing this for a long time...

    The problem is enough people fall for this to make it profitable for them... basically like spam.

    When I was working in webhosting, I don't know how different customers would call us asking about these "invoices" and if they should pay them or not... or asking why they have to pay us since they already paid them.... probably hundreds.

    It always annoyed me how they could get away with it...

  • Same old scam (Score:2, Interesting)

    by Anonymous Coward
    Back in the 80's there was a scam where a company would send bills for the phone directory and used the "walking fingers" logo which was never trademarked. People thought this came from the one and only phone company and paid it. The directory (if it was ever printed)was not the "official" one. (Back then there was only one phone book. it was either just before or just after the breakup of AT&T.)

  • Bogus bills not isolated to internet stuff... (Score:4, Informative)

    by PhotoGuy (189467) on Tuesday June 17 2008, @07:40PM (#23833031) Homepage
    When I had a large-ish company (75+ employees), it was fairly common to receive bills for things that we didn't order/subscribe-to. There are likely a number of companies whose accounts payable departments simply pay any bill coming in, without cross-referencing it to a purchase order. This is no different, really. (And even many semi-legit services, magazines, and so forth, would simply send an overdue bill, rather than a subscription renewal notice. I was always more surprised at some big names that would pull that somewhat deceptive practice...)

    (Is it just me, or does "ordering a halt to an illegal practice" sound kinda stupid? Seizing US assets, extradition, and so forth, fine. Go for it. But "stop doing that illegal stuff!" doesn't sound that useful. :)

  • What about DROA Domain Registry of America (Score:5, Informative)

    by mabu (178417) on Tuesday June 17 2008, @08:39PM (#23833525)
    The biggest scam artist I've seen is the Domain Registry of America - they send out snail mail letters with impressive looking American flag logos on them with a bogus invoice-looking form to renew domains, but it's really the Internet version of slamming the domain and switching registrars. DROA needs to be shut down.

    • Re: (Score:3, Informative)

      by despe666 (802244)
      The article does specify they ordered their US held assets frozen. However, if they're smart, they wouldn't have that much assets held in the US.

    • Re:When will they ever learn? (Score:5, Informative)

      by Tanman (90298) on Tuesday June 17 2008, @01:45PM (#23827773)
      The US Court sure the hell has jurisdiction in the US, where the crimes took place.
      • Not when the perps never entered or stepped foot on US soil.

        Now, if the owners of said company ever decide to vacation in the good ole U.S. of A, then watch out...

        • Re:When will they ever learn? (Score:5, Interesting)

          by Tanman (90298) on Tuesday June 17 2008, @01:51PM (#23827887)
          Except that the US Government regulates interstate and international trade within the borders of the USA. So, an international mail fraud that takes place inside the USA (US businesses received fraudulent letters and withdrew money from their US banks to pay in US currency), the government will enforce as much of its law as possible. It will also probably attempt to have the perps in Canada extradited to be tried in the USA for fraud/etc.

        • That only applies where we do not have any agreements or treaties for extradition with the other countries.

        • Re:When will they ever learn? (Score:5, Interesting)

          by neoform (551705) <djneoform@gmail.com> on Tuesday June 17 2008, @02:10PM (#23828195) Homepage
          This is where extradition comes in.

          If the US asks for the Canadian gov to hand over the criminals and the Canadian gov agrees that they are in fact criminals, then they'll get shipped off and charged in the US for breaking US law.

          The same can happen in reverse.

          • Re: (Score:2, Interesting)

            by GuyverDH (232921)
            That's if the Canadian legal system agrees that they are criminals...

            If for whatever reason, they determine that preying on stupidity isn't a crime, then a disagreement may ensue.

            I'm not stating that's what will happen, just putting it out there.

            I know there have been disagreements before as to what constitutes a crime, depending on where you are at, where the action took place, and whether or not the action was physical or virtual.

            If I place an advertisement in a magazine, and say "Send $5.00, and SASE to
            • That's if the Canadian legal system agrees that they are criminals... If for whatever reason, they determine that preying on stupidity isn't a crime, then a disagreement may ensue.

              If this happens then prosecution can go back to the US courts can go after the assets of the foreign entity that happen to exist in the US. So if this company happens to use Bank of America for their banking service then their BoA funds can be seized. If they used PayPal for collecting the extortion^H^H^H^H^H^H^H^H^H payment

              • I finished RTFA after I posted my message.

                The defendants named in the FTC complaint are Data Business Solutions Inc., also doing business as Internet Listing Service Corp., ILS Corp., ILSCORP.NET, Domain Listing Service Corp., DLS Corp., and DLSCORP.NET, and its principals, Ari Balabanian, Isaac Benlolo and Kirk Mulveney.

                The case listed 3 principals by name so they should be able to be held liable for the judgement in the scenarios I outlines above.

          • This sort of mail fraud, along with spam, should be a capital crime. Unfortunately, that would mean that Canada would never agree to extradite them. Decisions, decisions.
            • The U.S. could just make the minimum sentence life imprisonment in general population. A fellow inmate whose grandparents or parents were scammed by spammers or fraudsters would probably take care of the problem within a few months.
            • As a Canadian, I volunteer to round them up, place them in burlap sacks, and drive them down. I'll meet you at the Niagara Falls border crossing.

              What happens to them after is up to you.
        • Where are the DNS root servers?

          Hint: That's the country where the courts have the final say.

    • Re:When will they ever learn? (Score:5, Informative)

      by davetd02 (212006) on Tuesday June 17 2008, @02:00PM (#23828021)
      Au contraire. If the Canadian companies are scamming US companies by using the US postal service, you can bet that the court has jurisdiction to order them to stop.

      If they don't stop, they will be in contempt. Any assets that ever enter the US can be seized. And I suspect that Canada would be more than happy to enforce the contempt judgment.

      Because the targets of the scam are in the US and the US mail is being used, the court has all the jurisdiction it needs. To check this, see the Supreme Court's decision in Asahi Metal Industries Co. (1987), holding that a foreign product manufacturer could be dragged into US court if it foresaw that its products would be used in the US. This case is even stronger -- the Canadian scammers intended their scam to reach the US.
    • While the headline is a bit erroneous, if you bothered to RTFA you might actually understand what is going on here. But since you obviously just like posting crap, I will help you out with some important tidbits.

      ...consists of the FTC, the U.S. Postal Inspection Service, Competition Bureau Canada, the Toronto Police Service - Fraud Squad, the Ontario Ministry of Government Services, the Ontario Provincial Police - Anti-Rackets, the Royal Canadian Mounted Police, and the United Kingdom's Office of Fair Trading.

      A federal district court judge in Chicago, Robert M. Dow, Jr., ordered a halt to the deceptive claims and froze the defendants' assets held in the United States, pending trial.

      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 defendant has actually violated the law. The case will be decided by the court.

      • Re:When will they ever learn? (Score:5, Interesting)

        by Anonymous Coward on Tuesday June 17 2008, @01:44PM (#23827767)
        There are two issues here. The US still controls the DNS servers, and Canada is part of NAFTA which forces them to comply with certain trade restrictions. Canadian courts could theoretically block this ruling and override the DNS change, but there is about a 0% chance of that happening. What is likely is that the US courts operated faster than the Canadian courts with this issue. I expect to see the Canadian courts charging these people with fraud in the next couple of months.

        • Re: (Score:3, Insightful)

          by Socguy (933973)
          Hopefully. Fraud is fraud no matter where it originates. With the internet providing the con-artists faster and a wider range of underhanded opportunities, our two countries need to coordinate an efficient attack on this type of behaviour. Hopefully, the police and the courts up here will toss these criminals behind bars where they belong.

          • Re:When will they ever learn? (Score:4, Interesting)

            by icegreentea (974342) on Tuesday June 17 2008, @04:04PM (#23830149)
            That is true. That being said, fraud is fraud anywhere. You have fraudsters based in Canada (I am Canadian btw), who are scamming American companies and then splitting the money into American and Canadian accounts. What the US Courts have done is found these people to be guilty of fraud (I'm finding it hard to argue against their logic. You have a group charging for a service that they are not providing. No matter how stupid people have to be to fall for that, its still fraud), and they have frozen their US accounts and assets. The Canadian courts can do whatever they want, but if the Canadian court has any conception of justice (or at least just doing their job properly), then they should freeze the Canadian assets and charge the fraudsters too.

            There is quite a bit wrong with Americans trying to impose their rulings on everyone. But that doesn't mean they're always wrong. Nor that every case where our two court systems do something like this is a an outrageous act of Americans trampling over our sovereignty.
    • Yup, I got one of these too. They were asking for ~$75 for a one year renewal of a .com domain. I think there was small print stating "this is not an invoice", but otherwise looked quite convincing.

      I can see how the uninformed masses could easily fall for it.

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