The federal government is seeking a permanent restraining order against a Canadian firm it accuses of bilking U.S. small businesses out of millions of dollars in fake domain name renewal fees.

According to the Federal Trade Commission, Internet Listing Service, a Toronto-based firm, has issued thousands of bogus invoices in the past four years that appear to come from a company's existing domain name registrar.

"Many of the businesses and nonprofits believed they would lose their Web site addresses unless they paid the bill, so they paid," the FTC said in a statement released this week. Yet most businesses that paid the fees received no domain registration services, the agency charged.

In addition to fake renewal fees, the firm is also accused of selling a search engine optimization service it never provided. According to the FTC, the firm told business owners the service would "direct mass traffic" to their sites. Agency investigators say the service "is ineffective and does not result in increased traffic."

Last month, a federal district court froze the company's U.S. held assets, preventing PayPal and other online payment services from processing its accounts. It also forced the company to shutdown two Web sites.

The restraining order will permanently bar the company from doing business in the United States. The FTC is also seeking damages for small businesses that paid the fees.

Published on: Jun 18, 2008