A few days ago, I posted about Dell’s lawsuit against a notorious domain-tasting network.
In that case, the domain-tasting network exploited I-CANN’s five-day-refund rule to park millions of domains without paying for them while simultaneously earning revenue from pay-per-click advertisements. (There were trademark issues in the case as well.)
The reactions from Mozzers on the ethical/legal implications of domain tasting and I-CANN’s refund policy were mixed. Some people thought domain tasting should be illegal and was harmful to business owners. Others felt that domain tasting was just smart business and that domain tasters shouldn’t be punished for being shrewd and successful.
Today, there are allegations flying around that Network Solutions, a very popular internet registrar, has been exploiting that same five-day-refund rule to park domains and then sell them at an increased fee. If the allegations are true, then Network Solutions was operating a very cunning business.
Here’s how the scheme worked:
Network Solutions would track what domains people were searching for. With this actionable intelligence in hand, it would quickly purchase those domains and park them. When an interested party went back online to purchase the domain, they would discover that Network Solutions had already registered it. Of course, Network Solutions was willing to sell it to them for a fee. This fee was more expensive than other competing registrars typically offer. Alternatively, if the interested party did not come back online to purchase the domain within five days, Network Solutions would simply take advantage of I-CANN’s refund policy and void its own registration. No cash out of their pockets!
Network Solutions did not break any laws and did not violate any I-CANN policy by front running domains. However, it certainly feels like there is something unfair and harmful to markets going on here.
In my opinion, it negatively affects the integrity of the I-CANN system. Network Solutions essentially creates successive five-day monopolies on domains. Talk about creating an artificial scarcity to drive up prices!
Pass me a soap box because here’s my prediction: If I-CANN doesn’t eliminate or change its five-day refund policy by adding a transaction cost for registration (like PIR’s solution described in my previous post), we could be looking at a registration system that operates like OPEC. It allows anyone who controls a registrar to artificially inflate prices and invites a climate of collusion and gaming.
While this is not illegal, it disproportionately harms the small business or individual with fewer resources. This, in turn, would lead towards a web dominated by big players (large public institutions and large corporations). The “little guy,” in turn, would be relegated to social media and other hosting sites for a web presence. To a certain extent, obviously, this has already happened and was unavoidable.
Without regulations and laws in place, those in power tend to stay in power. I-CANN and registrars have the most influence over the refund rule and the least incentive to change it.
Perhaps, however, with enough exposés like this one regarding Network Solutions and the Dell civil lawsuit, there will be sufficient pressure to take action.
Or am I just jealous that Network Solutions thought of it first?
Best Regards,
Addendum: Bill Hartzer is credited with discovering this story and has excellent coverage here.
