Chicago Jeweler Accused of "Cyber-Squatting"

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With the online Christmas shopping season in full swing, Illinois Attorney General Lisa Madigan is suing a Chicago area jewelry store that she says unfairly took business away from its competitors and deceived online shoppers by using copycat Web addresses to redirect consumers from their intended Internet destinations.

Perpetrating a scheme known as "Cyber-Squatting," a Chicago jewelry store targeted consumers seeking to do business with its competitors by registering several Web addresses that mimic and are almost identical to the Web addresses of other local jewelry stores.

If an online shopper accidentally misspelled or mistyped another Chicago jewelry store’s Web address, there was a good chance the consumer would be redirected to www.diamonds-chicago.com, the lawsuit alleges.

Named as defendants are Chicago Diamonds, Inc., doing business as Diamonds Chicago, and the company’s president, Michael Kelly. The lawsuit charges the defendants with violations of the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois Uniform Deceptive Trade Practices Act.

"This lawsuit will help to ensure that holiday shoppers looking to buy a gem online won’t find themselves on a counterfeit Web site," Madigan said. "Chicago Diamonds is clearly trying to take advantage of consumers’ desire to shop online. While there are always new schemes using technology to perpetrate fraud, my office will continue to protect consumers."

The fraudulent practice of "Cyber-Squatting" occurs when a business registers a domain name, or Web address, similar to that of its competitor to increase traffic on its own Web site and away from the Web site of its competitor.

In this case, Madigan contends that Chicago Diamonds usually only added or subtracted a single letter from the legitimate domain names of its competitors.

Madigan said her office’s Consumer Protection Division received complaints from 10 Chicago-area jewelry stores alleging copycat Web addresses had been created to divert traffic away from their Web sites to the Chicago Diamonds site.

For example, La Ron Jewelers in Chicago claimed that Chicago Diamonds created a copycat Web address to redirect traffic to www.diamonds-chicago.com by deleting one letter from the actual La Ron Jewelers Web address of www.laronjewelers.com.

The lawsuit asks the court to prohibit the defendants from continuing their deceptive practices and further violating Illinois’ consumer protection laws.

It also seeks a civil penalty of $50,000 and additional penalties of $50,000 for each violation found to have been committed with the intent to defraud.

Finally, Madigan asks the court to order the defendants to transfer the registration of all relevant domain names to the affected competitors and pay restitution to consumers.

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With the online Christmas shopping season in full swing, Illinois Attorney General Lisa Madigan is suing a Chicago area jewelry store that she says unfairly took business away from its competitors and deceived online shoppers by using copycat Web addresses to redirect consumers from their intended Internet destinations.