Tips to avoid getting scammed

Here are some tips to limit the chances you fall for a scam.

Domain investor Richard Dynas posted a story on NamePros yesterday about getting scammed in a domain name transaction. He paid for a domain name that a scammer didn’t own.

Dynas is embarrassed, and when you read his story you will understand why. There was not just a single red flag in this transaction; there was a sea of red flags. Burning hot red flags.

But we’ve all been scammed, suckered, or made a bad deal in life.

One story I tell is being duped out of twenty bucks in San Francisco. I was in line to enter a parking lot and the lot attendant was collecting the $20 entrance fee. The three cars in front of me paid, then it was my turn. I pulled up, he handed me a yellow dashboard ticket and asked for $20, and I handed it over.

As I was parking I saw the official parking lot company van pull in and the “attendant” ran off.

What just happened? That guy was the attendant. He had an official-looking windbreaker on. He had the yellow tickets. Everyone else paid him.

But we’d all been duped by some random guy who made $80 in about five minutes.

It was only $20 bucks, but you get that nasty feeling in the pit of your stomach when you get duped. And you learn lessons from it to make sure it doesn’t happen again.

So kudos to Dynas for posting his story. And here are some of my tips to reduce the chances that you get scammed in a domain name transaction:

1. Look at historical Whois. This is a must, especially when the domain has Whois privacy as in this case. Had Dynas looked at the historical records he would have seen a mismatch with the person he was dealing with. Perhaps the person would have explained away the difference…which is why, if the dollar amount is more than a threshold you’re comfortable with losing, I strongly recommend contacting the prior owner of the domain.

Many years ago I almost bought a stolen domain. Before I completed the transaction I viewed the historical Whois and contacted the prior owner. He told me that the domain was stolen.

I realize that DomainTools is expensive. But you can also get historical Whois records from DomainIQ for much less money. The money is worth it.

2. Understand that email addresses can be faked. Anyone can send email from many unprotected domains. The scammer in this case was clever; they sent “proof” from an email address at the domain that started with [email protected], so sending a message to it would likely bounce. Make sure you can send an email to the person’s email address hosted on the domain.

3. Talk on the phone. Talking to someone on the phone doesn’t prove that the person isn’t lying, but it can often tell you that the person is!

Perhaps the person you’re dealing with claims to be a woman who lives in Florida. They are a really a man who lives in Asia. When you ask to talk to them on the phone, they will decline because they know it will give it away.

I have a friend who owns vacation rental properties in Austin. His #1 tip to avoid getting scammed when renting a home on AirBnB or HomeAway is to talk to the person on the phone.

He told the story of someone who thought they had rented one of his houses for SXSW through Craigslist. The person had been duped, and he explained that if they insisted on talking to the scammer on the phone before “booking” the house, they likely would have avoided the scam.

4. Use Escrow, unless… Everyone has their own threshold on when to insist on using an escrow service. I disagree with the claim that you always need to use an escrow service. But 99% of the time it makes sense.

The exception is if you’re dealing with a large company and have a signed contract. You still might want to use an escrow service. After all, it’s very cheap. But large companies might have legal reasons for not using domain escrow services.

This brings up another point. I know one person who insists on signing a contract whenever he buys a domain, even when using escrow. It can add other protections. It’s a good idea…again, it’s a question of your threshold. If someone asks me to sign a contract when I sell her an inexpensive domain, I’ll weigh if it’s worth my time. But when the dollar amount is high, it’s a completely reasonable ask.