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Leave a Comment / By Sorin Mihailovici / November 23, 2023 November 23, 2023
Common Flippa Scams: How They Work
Buying and selling domain names is the new thing. However, with the opportunity comes a lot of risk as several Flippa scams have emerged in the last little while. In this article, I’ll expose some financial scams and fraudulent businesses on Flippa. Here they are.
What Is Flippa
Flippa is an online marketplace that sells online businesses, blogs, e-commerce stores, apps, and Shopify shops. Many have low prices. Sellers often accompany their listings with persuasive narratives, explaining why they’re parting with their enterprises and supporting their claims with screenshots.
Too good to be true? Let’s find out.
Let’s look at Flippa’s reviews, vetting practices, and the Top 5 most popular scams.
Watch the video below to see a guide on properly purchasing websites on Flippa without getting scammed:
Why People Think Flippa Is Risky
There are three main reasons why people think Flippa is full of scams:
1. Flippa’s Reviews Don’t Inspire Trust
Flippa’s scores 3.3 stars from more than 1,340 reviews on TrustPilot – that’s pretty low.
While you might not find official complaints with the Better Business Bureau (BBB), you will find something relevant. Many users on Escrow’s BBB complaint page report getting scammed while buying from Flippa.
2. Flippa Doesn’t Vet Small Businesses
Flippa does have an in-house verification team. This team supposedly reviews the metrics (revenue, expenses, traffic, etc.) to ensure accuracy.
However, there’s a catch. Flippa’s team doesn’t verify every listing on the marketplace – only assets priced at $50,000 or more. Instead, they only check assets priced at $50,000 or more. This means buyers must rely on the seller’s word and the provided screenshots, which may not always paint the whole picture.
If you’re starting with online investing, you’ll likely be interested in smaller businesses, typically priced below $50,000. Consider beginner-friendly marketplaces that vet all deals sold on their marketplace (for example, Investors Club verifies their deals and members) to mitigate the risk.
Deals verified by Flippa have a “Vetted by Flippa” icon, which looks like a check sign next to two human outlines. But even with the “Data Verified” and “Vetted by Flippa” labels, there is no guarantee you won’t get scammed. You need to do your own due diligence. Flippa’s Terms of Service say as much: “Despite the fact that an asset or business is marked “Data Verified” and/or “Vetted by Flippa,” Flippa makes no warranties or representations as to the accuracy and completeness of the data displayed or the current or future performance of a business or an asset.”
3. Flippa Provides Little to No Support
Additionally, Flippa is known for its poor customer support during and after purchase. Buyers often find themselves navigating uncharted waters without a compass.
New investors, often lacking experience managing asset purchases and migrations, can struggle with this process. A perfectly viable business takes a hit, the revenue dips, and the company doesn’t perform as anticipated. This leads to a common misconception among buyers: they believe they’ve been duped into buying a lemon when, in reality, the issue lies in the transition and management post-sale.
Since Flippa is a legit marketplace, there is more than one scam model to watch out for. Different sellers resort to unethical practices to coax buyers into finalizing a rotten deal.
Top 5 Flippa Scams
Here are five common scam types you’ll likely encounter:
1. Fake Revenue
Many sellers will include pictures with stats about the site’s performance. Think revenue, shipped items, total earnings, and so on. But if the seller knows how to edit HTML using the “inspect element” tool, they can easily doctor the data on the page and then take a screenshot. They can even make a live video of the page with fake data.
Again, remember that if the listing price is less than $50,000, Flippa’s team won’t verify that the data provided is accurate. It’s your job to verify all the claims.
2. Fake (Purchased) Traffic
Many buyers rely on Google Analytics to verify a site’s traffic, and Flippa uses an API to confirm the legitimacy of these numbers. This is effective for assuring that the reported traffic numbers aren’t fabricated. However, this doesn’t protect you from low-quality traffic.
Many sources sell low-cost traffic from click farms or bots. You might buy a website with hundreds of thousands of visitors pulled from GA via API. The traffic is “real” but not “organic.” In other words, your traffic disappears as soon as the seller stops paying.
3. Fake, AI, or Stolen Content
Another concern with Flippa is the issue of fake, AI-generated, or stolen content. In an effort to boost the perceived value of their websites, some sellers add content that’s either AI-generated, plagiarized or outright stolen from other sources.
One buyer reported that they were buying an online business with an ebook. When they did their due diligence before buying, the sales and refunds checked out.
So they proceeded with the purchase, only to find out later that the ebook was full of fake testimonials and stolen images. Naturally, the buyer had to get the book rewritten and lost conversions and revenue along the way.
Stolen content damages the site’s reputation and could lead to legal battles over copyright infringement. A tricky aspect is that sellers may unknowingly sell stolen content, especially if they outsourced its creation and were deceived by the content creator.
Either way, you’ll want to run the content through a plagiarism checker (like Copyscape) to ensure everything is original.
4. Churn and Burn Sites
These websites are built to make short-term money, often through aggressive or unsustainable tactics. Once sold, these sites often generate no revenue, leaving the new owner with a worthless asset. The seller would then refuse the refund.
There was even an open letter on Reddit asking Flippa to stop covering these scams. Usually, the seller would create multiple site clones and sell them all with the same profit claims and money-back guarantees.
5. Hidden Costs and Liabilities
Another scam to look out for is hidden costs and liabilities, which can really eat into your profits. For example, you find a website that’s making $500 a month. And the seller ‘forgets’ to mention that the site needs a lot of storage, meaning you have to shell out for a dedicated hosting plan costing $400 a month. Suddenly, your profit drops from $500 to $100 monthly. These kinds of details can turn a seemingly great deal into a not-so-great investment.
Why Buyers Fall Victim When Looking For a Flippa Business For Sale
There are a few reasons why unsuspecting buyers get duped:
- New investors might not fully understand the terminology and trends. Some sellers use buzzwords like “adsense ready” to lure newbies in.
- A scammer might create fake accounts to bid on their own listing to make it seem more legitimate and desired.
- Inflated revenues look attractive. If you don’t have experience in the niche, you might be unable to tell that they’re unrealistic.
Warning Signs on Flippa Marketplace Listings
Before we dig into how to do your due diligence, let’s take a look at the 8 warning signs of a suspicious listing:
- Missing Google Analytics data (or other integrations that measure asset performance).
- Inconsistent data in integrated sources, such as unexplained spikes and dips in traffic or revenue, that the seller cannot satisfactorily explain.
- Numbers don’t add up.
- Unresponsive or uncooperative seller.
- Unreasonably low BIN (avoid anything where the BIN is less than 25 times the monthly profit).
- The seller has a lot of clone starter/cookie-cutter sites listed.
- Bad seller reviews.
- The seller didn’t complete the verification process (phone, identity, etc.).
How to Avoid Flippa Scams
Avoiding scams on Flippa requires a lot of due diligence and awareness. Here are five tips that can help you weed out bad deals:
1. Do Your Due Diligence
Remember that the listing descriptions aren’t written (or even verified) by Flippa. So, taking every part of the description with a grain of salt is always wise. Not all sellers will be upfront about the real issues with the asset.
Verify all claims the seller provides: traffic, revenue, and expenses.
Find out who the seller is. Do they have a lot of positive reviews? Did they verify their account? Did they sell other assets in the same niche before? Are all their assets unique, or do they sell clone starters for a quick profit?
2. Talk To The Seller
Sometimes, you might not be able to access the source directly, such as Google Analytics. That doesn’t always mean that the seller is a scammer. They could be relying on other third-party tools that don’t integrate directly with Flippa. Or they forgot to incorporate the source into the listing.
In this case, you can contact them to let you access the analytics tool. Alternatively, they can record a video of the tool while refreshing the page to show that they didn’t doctor the HTML.
Feel free to talk to them about the asset in general and why they’re selling it. If the seller tries to dodge your questions or feed you nonsense, walk away from the deal.
3. Look for Super Sellers
The Super Seller Program is a hand-picked collection of accounts with a proven history of listing high-quality assets on Flippa. They usually have stellar feedback from multiple transactions. Plus, Flippa requires all Super Sellers to complete their government ID and phone verification to be considered for the program.
While you still need to verify all the claims yourself, working strictly with this hand-picked selection of sellers can reduce the scam risk a bit. To do so, look for the “S” badge next to the person’s name.
To date, Flippa estimates that Super Sellers have sold approximately 36,000 listings, totaling a sales volume of $20 million. Hopefully, you can find what you want on the Super Seller Program. Just be prepared for premium prices.
Report a Flippa Scam
Warn your family and friends know about these 5 Flippa scams. Feel free to share the article if it was helpful. However, you can report scammers and any suspicious activity officially to Flippa, the Federal Trade Commission (most important), the Office of the Inspector General, and the FBI Internet Complaint Center by using the pages below:
How To Protect Yourself More
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Feel free to explore additional articles on related fraud. You can find them listed below this paragraph, so that you know more about online security. Last but not least, if you had any bad experiences, make sure to use the comments section below to expose other scammers.
