Domain Auction Scam

Unlike many other scams on the internet, domain auction scam is mainly targeted to low profile webmasters running domain auction websites especially with the escrow option enabled. Their primary victims are the webmasters who are new in the domain auction business.
In this type of scam, both the buyer and seller are friends or colleagues or even one single identity. In some cases, they reside in different countries thus making it even more difficult to trace them.
How it Works?
1. A seller lists a domain for sale at one of the low profile domain auction website which has the escrow option enabled. They list the domain at a high price like $500 or even more.
2. Within few minutes of listing the domain, a buyer bids on the domain and in less than a hour the deal is completed.
3. Buyer then proceeds to make the payment to the webmaster, thus adding the funds in his/her escrow account. Most webmasters use PayPal as the payment processing gateway which these scammers are aware off. The buyer will always make the payment without registering his/her account on PayPal and use Credit Card as the payment method.
4. Once the buyer has deposited the funds, he will intimate the seller. Seller in turn will contact the webmaster to issue him the payment.
5. Once the webmaster has issued the payment to the seller, the seller will intimate the buyer and after few days, buyer will decline his/her credit card transaction thus raising a charge back.
6. As always, credit card company will favor the buyer and webmaster will loose the dispute. As the PayPal agreement, PayPal will recover the funds from the webmaster.

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