Cybersquatting: How Scammers Profit from Big Names and Jeopardize Your Money

What is Cybersquatting and How It Works 

Cybersquatting — is the practice of illegally seizing or registering domain names that are similar to the names of well-known brands, trademarks, or company names. The main goal of scammers is to sell these domains at inflated prices or use them for fraudulent activities.

This phenomenon emerged at the dawn of the internet and is becoming more relevant each year. The main reason for the prevalence of cybersquatting is the ease of registering domain names and the lack of strict restrictions on their purchase.

Main Forms of Cybersquatting 

1. Classic cybersquatting — registering domains that exactly match the name of a brand or company. The goal is to sell the domain at a high price.
2. Typosquatting — creating domain names with typos or variations of popular sites. For example, instead of «example.com», «exampel.com» is registered. Users land on such sites due to inattention.
3. Domain masking — using subdomains and other methods to make the site look as similar as possible to the official company resource.
4. Using domains in similar languages — registering domains with similar characters from other alphabets. For example, the Latin «o» and the Cyrillic «о» may look identical but have different encodings.

Cybersquatting harms not only large companies but also small businesses and individual entrepreneurs.

Financial Risks and Consequences of Cybersquatting 

Companies and brand owners who fall victim to cybersquatters face serious financial and reputational losses. The main ones include:

For Business

1. High costs for domain buybacks. In cases where the domain name is strategically significant for the company, it has to be bought back at an inflated price.
2. Loss of customers and profits. Users who land on a duplicate site may encounter fraudulent schemes or have a negative experience. This reduces trust in the brand.
3. Reputational risks. If malicious content or unauthorized advertising is placed on the fake site, it negatively affects the company's image.
4. Legal costs. Companies are forced to spend significant resources on litigation and legal protection of their domains.

For Users

• Financial losses. Fraudulent sites may request payment for non-existent goods or services.
• Personal data leakage. Users enter their data on fake resources, which becomes available to scammers.
• Device infection with malware. Fake sites often contain malicious programs.

These risks highlight the importance of domain protection and timely measures to combat cybersquatting.

Fraud Schemes Using Domains

Scammers use various schemes to extract financial benefits from cybersquatting:

1. Fake online stores. On such sites, users make purchases but do not receive the goods.
2. Phishing attacks. Creating duplicate sites to steal user data, including logins, passwords, and bank details.
3. Traffic monetization. Cybersquatters place ads on captured domains and earn revenue from user clicks.
4. Malware distribution. Sites can automatically download malicious programs to users' devices.
5. Affiliate schemes. Using domains to redirect traffic to third-party resources to receive commission payments.

These schemes not only cause financial damage but also undermine users' trust in internet resources.

Ways to Protect Domains from Cybersquatters

Protecting domain names is an important task for businesses and users. There are several effective measures:

• Register all possible domain variations. This prevents the capture of similar domain names by scammers.
• Domain zone monitoring. Regular monitoring of new registrations helps to detect cybersquatting attempts.
• Trademark registration. Having a registered brand allows for fighting cybersquatters legally.
• Appeals to arbitration courts. International organizations like WIPO help to resolve domain disputes.

Using domain zones with a high level of trust. For example, domains like .bank and .gov have strict registration requirements.

Practical Recommendations for Business 

Protect key domain names on all popular platforms.

Implement domain activity monitoring systems. Respond promptly to cybersquatting attempts and involve lawyers to resolve disputes.

These measures will help reduce risks and protect the business from financial and reputational losses.

Cybersquatting poses a serious threat to businesses and internet users. The financial risks and damage from fraudulent schemes make proactive measures to protect domain names necessary. Paying close attention to security and timely actions will help prevent potential losses and protect the reputation of brands.