Like any lucrative industry, the domain business has attracted its share of bad apples.  Sadly, some people will do anything to make a quick buck—even if it’s illegal.  One of the most popular scams right now is a form of traffic fraud called the “pump and dump”.  It’s analogous to the form of stock fraud bearing the same name.  However, by doing just a modest amount of research you can avoid falling into these snares altogether.  Fortunately, Sedo.com now provides a tool to help make the process of researching traffic a lot less time intensive.

Click fraud and misrepresenting the value of traffic has been around for some time now.  However, now that most pay-per-click companies have implemented new filtering methods and fraud detection programs, fewer scam artists are getting away with parking fraud and are instead turning to new forms of fraud including domain hijacking and sales fraud. The industry as a whole is concerned about these growing trends and has made it a focus of the last two T.R.A.F.F.I.C. industry conferences.  Currently the best defense is to be aware of the scams that are out there and avoid the pitfalls altogether.

The “pump and dump” scam involves a fraudulent seller picking up an inexpensive domain and then proceeding to artificially inflate the traffic the domain receives by manufacturing it, either through link exchanges, promotional software, a pop up generating virus or other means.  Once the domain has enough traffic to make it look tempting, that person then places it on the open market and sells it to the first bidder, usually for a price that makes it look like a real ‘steal’.  However, don’t let the lure of easy money fool you.  A little research goes a long way into filtering out these bad apples and their worthless domains.

Before buying a domain for its traffic, you’ll want to know if it’s legitimate.  The origin of the traffic, whether the domain is listed in popular directories, how often people search for the domain, and whether it was previously developed are all good things to reference before submitting an offer for a domain.  Luckily, Sedo has made this research as easy as clicking on a link, specifically one you’ll now find on every offer page entitled “Analyze the domain: domain.com”.

We’ve partnered with URLTrends to show you some of domain’s most crucial background information in a snapshot:

1.  The domain’s Google Page rank:  This will show how fast the domain will show up in the world’s most popular search engine when someone searches for a keyword related to the domain.  Pages are ranked 0 - 10 in the Google system with 0 being the lowest rank and 10 being the highest.  Domains that were never developed, even good keyword domains may very well have a page rank of 0 and like all other factors page rank needs to be taken in context.  Domains will lose their page rank when they expire or change hands so it doesn’t have a bearing on the future value of a domain name.  Since it reflects how popular it was as a developed website Page Rank could explain a parked domain’s traffic.

2.  The domain’s Alexa rank:  Alexa.com offers traffic rankings for websites.  For example Yahoo.com is ranked number 1 as the most popular destination on the web, Sedo.com is ranked the 920^th most popular destination on the web and blue.com is ranked 195,066 in Alexa.  Alexa bases their ranking system on the type in traffic of those who use their Alexa tool bar.  This represents a large number of Internet users but this is still only a fraction of the web surfing public so like the Google page rank it has to be taken into context with all other information.  Still, an Alexa rank may offer an estimate of a domain’s type in traffic.  An Alexa rank under 1 Million is generally a good indication that the domain receives a significant amount of traffic.  There are no certainties however.

3.  The Domain Analyzer will also show the domain’s link popularity or how many sites are linking to the domain.

4.  Whether the domain is listed in DMOZ, the web’s largest open directory:  This is crawled or used as a reference for most of the large search engine companies.  A listing in DMOZ could legitimate a domain’s traffic if it seems unusually high.

5.  Whether the domain is listed in archive.org:  This will show you whether the domain was previously developed.  A previously developed site may receive traffic from sites that link to it as well as previous fans that are still trying to find old content.

Last, but certainly not least, you can always email or call a Sedo account manager if you have any questions. We try to remind users that research is the best defense against fraud like the “pump and dump” scam and we will be happy to look into a domain’s traffic origins and offer all possible assistance in making your purchases.  

(NameNewbie.com wishes to thank Jay Finnan and Sedo.com for contributing this article).