The United States has frozen the operations of a fake domain registration service in Canada, imposing a suspended fine of more than $4.2 million.
Toronto-based Internet Listing Service sent misleading fake invoices to victims asking them to pay to maintain their domain name registration, according to the Federal Trade Commission, even though it had not registered the domains for them. The company would also sometimes register slight variations on the victims' domain names and charge for those.
The firm's fake invoice would require companies to pay for an annual "website address listing", simultaneously promoting a search engine optimisation service. The invoices were targeted at consumers and small businesses. Misleading statements included promises that the search optimisation service would “direct mass traffic” to websites.
Recipients were asked for eight to 25 key words in addition to their payment, and were told that their websites would be submitted to a range of search engine services, and that they would receive quarterly search engine ranking reports.
“For the vast majority of consumers who pay the invoices, defendants simply pocket the consumers' money in exchange for doing nothing,” said the FTC's complaint. “Thousands of consumers who have been deceived by defendants' mailings have paid defendants a fee ranging from at least $35.00 to $75.00, and have not received the services promised by defendants.”
Small print in the original document sent to the recipients stated that it was a solicitation, not a bill, but the complaint against the defendants stated that this was inadequate notification. Once victims had made an initial payment, further invoices were sent.
Defendants Isaac Benlolo, Kirk Mulveney, Pearl Keslassy, 1646153 Ontario Inc. and Steven Dale were served with a settlement order, including a suspended judgement of $4,261,876, which the FTC said reflected the total amount of consumer injury caused. However, the defendants are unable to pay that figure, and so will be fined $10,000 instead.
The assets of Pearl Keslassy and 1646153 Ontario Inc. were frozen after the FTC originally bought an injunction in September 2008. The defendents also traded as ILS Corp., Domain Listing Service Corp., and DLS Corp. The ILScorp.net and DLScorp.net domain names used by the defendents to sell their services are no longer registered.