Courts Silence “.USA” Marketer

An online marketer accused by the U.S. Federal Trade Commission (FTC) of false advertising has been forced by a federal court to suspend operations.

The London-based company, doing business as TLD Network Ltd., Quantum Management Ltd., and TBS Industries, hawked top-level domain names like “.Brit” and “.Scot.” The problem is that not only is the firm not an accredited registrar, those top-level domain names are altogether useless as Web or email addresses, due to the Internet’s naming conventions.

Beginning shortly after the Sept. 11 attacks, the company began selling domain names ending in “.USA” — also unusable — from its site at DotUSA.com, which it promoted through unsolicited email titled “Be Patriotic! Register .USA Domains.”

The email themselves promoted “the latest domain name extension … the fresh, new, exciting Web address that is taking the world by storm.” The messages directed consumers to the site, where they could buy .USA “domain names” for $59.

In late February, the FTC filed a complaint with the U.S. District Court in Illinois against the company’s U.S. operations, charging deceptive advertising. The agency said TLD/Quantum/TBS Industries violated federal law by not disclosing that the domain names being sold were not usable on the Internet, and by sending deceptive email ads.

The FTC complaint also names company officers Thomas Goolnik and Edward Harris Goolnik.

This week, the court ordered the closing of the company’s site, forbade the DotUSA.com site from being reregistered and relaunched by domain registrars, and froze the firm’s U.S. assets with an eye to paying back duped consumers. The FTC said it believes the company made more than $1 million from the scheme.

The FTC said it also had been working with U.K. officials on an investigation into the company’s activities abroad.

“These spam scammers conned consumers in two ways,” said J. Howard Beales, III, director of the FTC’s Bureau of Consumer Protection. “They sent deceptive spam, and they sold worthless Web addresses from their Web sites. By closing down this operation we’re sending a strong signal: We will not tolerate deceptive spam.”

The move comes as the FTC is stepping up efforts to stamp out false and deceptive email ads. Last month, the agency settled with seven email marketers that it had caught running a pyramid scheme. FTC heads have said that it plans to bring still more fraudulent online marketers to justice in the near future.

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