E-scammers trashing reputations

Through tactics like cyber-squatting and phishing, online criminals are hurting the reputations of legitimate businesses as they ply their trade

Phishers, cyber-squatters, and other online fraudsters continued their assault on well-known corporate brands over the last 12 months, increasing the burden on the companies being targeted and further frustrating consumers.

According to MarkMonitor's annual "brand-jacking" report -- which attempts to gauge the level of damage being extracted on corporate reputations by online scammers via schemes like phishing -- problems only intensified last year for businesses in defending their public images online.

Among the biggest shifts from the findings of the company's previous report was a dramatic spike in 2007 in the prevalence of cyber-squatting, or the practice of occupying a URL that either contains or is constructed to appear similar to the name of an established corporate brand for the sake of deceiving users or carrying out some form of fraud. MarkMonitor, which bases its results on investigations of public records, including URL registration applications filed with Internet Corporation for Assigned Names and Numbers (ICANN), estimates that cyber-squatting rose by 33 percent in 2007 compared to the previous year.

The research firm said that it observed some 382,248 instances of cyber-squatting during the fourth quarter of 2007 alone with a particularly noticeable increase in the use of brand names and trademarks utilized to drive traffic to illegitimate, unauthorized, or offensive Web sites through popular search engines.

MarkMonitor experts said that the renewed growth in cyber-squatting, which had become less prevalent than brand attacks carried out using phishing schemes over the last several years, is likely tied to the large number of people trying to make money through online advertising scams.

While people could make money through buying generic URL names and building sites that pointed to advertisements using legitimate means in the past, the increase in operating expenses driven by the price of attractive domains names is pushing wider brand abuse, experts said.

"With well-known terms going for six to seven figures in legitimate domain auctions, people trying to make money by driving traffic to online advertising find themselves struggling because all the most recognized dictionary words and phrases are already gone," said Frederick Felman, chief marketing officer at MarkMonitor. "As a result, some of these people who are trying to make money are resorting back to exploiting brand names to do that."

Another increasingly common tactic emerging among cyber-squatters is the use of combinations of popular brands in URL names, the report said, such as a site recently observed by MarkMonitor at "GucciFendi.com" which adds a pair of well-known fashion brands together for the sake of drawing eyeballs. The site was not authorized by either Gucci or Fendi but could show up in Web searches for either company.

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