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Beware Of Fraud When Buying and Selling Websites On SitePoint

March 5, 2009 on 9:56 am | In Virtual Real Estate | 21 Comments

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Over the last 18 months I’ve established a “side business” with Nick Schoonens where we buy, “renovate” and sell established websites (or hang on to them for cashflow). It’s an interesting business model (very lucrative too, if you buy wisely and know how to optimise traffic and conversion).

One of the best places to find established websites for sale is the SitePoint forum. Sure, there’s a lot of junk there, but once in a while there’s a fantastic deal that’s worth snapping up. The SitePoint guys have done a great job with their site and they are continuing to take steps to ensure that auctions are legal and above board.

But a few auctions still slip through the cracks – here’s one real example of a fraudster attempting to bilk an unsuspecting site purchaser out of his cash.

The Back Story

Around mid-2008 a business contact sent me an email to say he was excited about the possibility of buying his first site on SitePoint from a certain “Tony Normand” of www.stop-smoking-guru.com. Before he “pulled the trigger” and shelled out the asking price of $18,000, he asked me to check it out to see if I could spot anything amiss.

When I checked it out, I discovered that the whole thing was a giant scam.

The basic format of these scams is that the fraudster provides info and supporting evidence to corroborate the site’s income and justify the asking price, but when you finally gain access to the site (if you ever do), the actual results fall well short of claimed results. But by then, you’ve handed over the cash and the seller has skipped town.

The Trail Of Evidence

Below is a partial screenshot of the seller’s ad on SitePoint showing the purported site stats [or click here to open the full ad in a new window]

Sounds great, right? Who wouldn’t want to buy a $6,000 per month income stream for only $18,000. That is silly money…a little too silly. The unusually high return made us very suspicious.

So let’s review the supporting evidence

The seller very kindly supplied a variety of screenshots, corroborating the traffic, income, affiliate activity and mailing list size. It certainly looks the part:

Claimed traffic volume:

Claimed sales volume:

Claimed mailing list numbers (edited for clarity):

Due diligence reveals tampering with the evidence

Having bought a number of different websites and considered many more, we’ve developed a comprehensive website purchase due diligence checklist to help assess sites. When I started running the checklist, this public page on www.rentacoder.com turned up:

Hmmm, that certainly looks suspicious. A person by the name of Anton Cheranev has engaged a contractor to, ahem, “change three marketing images”. I followed the links (now taken down of course), and found this:

Real mailing list numbers (edited for clarity):

Real sales volume (a similar, yet unrelated image?):

Real traffic volume:

I was not able to follow one of the links to grab the real traffic volume image. But by that point, the game was up… it’s amazing what a little PhotoShop can do.

My friend contacted SitePoint and they shut down the auction, but there’s not a lot more they can do, other than trying to prevent future occurrences.

Be careful when you buy websites – “renovating” existing websites is a great business model if you can make it work, but the biggest “unknown” is corroborating the seller’s claims. If that problem could be overcome, the Buy-Sell website game would get a lot easier.

Will Swayne

Website Doer-Upper

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21 Comments »

21 Comments »

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Well spotted and congrats on saving your mate from a huge headache. I have used sitepoint twice before, although I do visit regularly just our of curiosity. I bought a site from there some 5 years ago and then sold it again via there 2 years later making a small profit on the initial buying price, + of course 2 years sales.

Before purchasing any site I would recommend accessing the stats package to have a look around and confirm results, the same goes for sales. Anyone can doctor a screenshot so having real-time access to stats is a must. The alarm bells should have been ringing anyway with this site as PR1, low monthly visitor count and high profits just doesn’t quite add up to me.

Well done

Comment by Matthew - Business Franchise — March 5, 2009 #
Yeah it’s rampant at the moment. I love the auctions where very little effort has gone into concealing the fraud. I saw one auction that had 200k profit “guaranteed” and looking at the site it was a terribly written one page ebook selling site.

It’s also a lot easier than photoshopping images. It’s also extremely easy to modify revenue screenshots using firebug as well as this youtube video shows http://www.youtube.com/watch?v=F15jKQu1Ej8

Comment by Luke — March 6, 2009 #
Thanks Luke for the YouTube vid. I hadn’t thought of the Firebug method. Sheesh, now you don’t even need Photoshop to screw someone over….

Comment by Will — March 6, 2009 #
Wow! That is pretty crazy.

I never even know about sitepoint, this is an interesting little community. Sounds like you are one of those people that buys old houses, fixes them up, and then resells them. But for websites. Pretty neat concept if you ask me.

Comment by Minneapolis SEO — March 7, 2009 #
Scary thought on this one. If you really don’t know what you’re looking for, then you can really get into a bad situation. Nice article here.

Comment by Kerry — March 8, 2009 #
Wow, good catch. I actually had seen that FireBug method of modifying a page before, very tricky stuff. I’m going to be very careful in the future when shopping for sites.

Comment by David — March 9, 2009 #
Hey thanks for alerting me, i was just searching google for sitepoint alerts and lucky i land on this page and got to know what to do next.. Thanks

Regards,
Sussane

Comment by Sussane — March 9, 2009 #
Thanks for this post. I have bought sites from people in past – at small amounts so never faced a situation like this. This is scary!

Comment by Suzanna — March 9, 2009 #
Certainly an eye opener. Would you by any chance want to post your due diligence checklist for us? It would be a very valuable resource to help people avoid scams such as this in the future.

Comment by Leadership Expert — March 11, 2009 #
I prefer that people share their analytics account or cpanel with me before I buy a site.

I have seen auctions where buyer didn’t even own the sites )

BTW, it will be cool if you share the ‘checklist’ with your readers.

Comment by Jeet — March 11, 2009 #
The bottom line is due diligence must always be practiced regardless whether the transaction is small or not. It pays to do your job. Thanks for this post for reminding us to be vigilant.

Comment by Internet Ninja — March 15, 2009 #
I am over concious when people want to sell their cow who is giving enough milk to them. Why should they will sell them for only 3 times more than their monthly income.

This one is sounding really awkward and I got my sixth sense alert. I would love to search more about the seller and his credibility in other forums as well.

As $18000 is not a small amount. Thanks for alert.

Comment by Hypnotherapy Manchester — March 20, 2009 #
Thanks for this great case study of how to avoid a site point scam! I’ve thought about trying the whole website flipping thing, but have yet to do so. But even when i start doing it and it’s my first time I’d never believe a seller promising that much income per month. Just like you said “that’s a little too silly”. Haha. And I gotta agree with some of the comments, access to real time stats would be a must for me. Thanks again for the great cautionary tale.

Comment by CSS Perk — March 25, 2009 #
Now I don’t expect you to divulge your whole due diligence check list here but I’m just interested how you found the page on http://www.rentacoder.com.

Comment by team leadership training — April 17, 2009 #
I’m gonna be alot more cautious from now with these types of things. Thanks for bringing this to my attention.

Comment by London Notary — April 20, 2009 #
OMG! That’s crazy. That sounds so good, that I bet a ton of people fall for stuff like that. It’s such a bummer that some people are just out there to rip you off and make a buck.

Comment by Diet Blog — April 21, 2009 #
Surely no one would part with money based on those facts anyway? Would they? I would want remote access to the server to check out logs etc before even entering into negotiations. Even they can be manipulated!

If I was to buy a website anyway, it would have to be on domain name and traffic potential alone rather than affiliate sales claims.

Lee

Comment by Travel Activities — May 15, 2009 #
First I must say that this is the kind of business I also want to be involved in, but it requires a lot of business acumen, as you just demonstrated. I recently fell for a very small scam, and it opened my eyes. The Internet is still very unregulated and one must beware of cheaters.

Comment by Obama — June 23, 2009 #
Wow, good catch. I actually had seen that FireBug method of modifying a page before, very tricky stuff. I’m going to be very careful in the future when shopping for sites.

Thanks and Regards

Comment by Multi-socket mains adaptor — July 21, 2009 #
True. I know one of my friend bought a freelancing website for about $9k. Traffic, income, members all true. But the problem started when people started asking for to approve their withdrawals. The backend of that freelance site shows about $5k escrow money in owner’s a/c. But there seller didn’t told about that to my friend. Think how difficult it is. People who paid with paypal started to dispute their payment. At last my friend last my friend paid that $5k additional. But the site lost goodwill among its members.

We need to be very careful always when buying established websites. We need check each and every corner for scam.

Thanks for the share.

Comment by Valparaiso Landscape Lighting — August 30, 2009 #
Many scammers cruise reputable online auction sites, but may entice you to go offline for a similar item. Others will email a link to another site, claiming that it is helping with the transaction. But once you leave a reputable site, your vulnerability to a financial swindle or identity theft increases.

Comment by Clickbooth affiliate network — November 18, 2009 #