FTC Halts Domain Name Scam
The Federal Trade Commission has asked a U.S. District Court Judge
to halt an Internet domain name scheme that dupes consumers into
needlessly registering variations of their existing domain names
by deceptively contending that a third party, acting in bad faith,
is about to claim it. The agency estimates that, at a minimum, 27,000
consumers may have been victims of the scam. At the agency's request,
the court has issued a Temporary Restraining Order, frozen the defendants'
assets, and shut down their Web sites, pending trial. The FTC has
asked the court to bar the scheme permanently and order consumer
redress.
According to the FTC, consumers - many of them operating small businesses
on the 'Net - received unsolicited fax solicitations stating, "URGENT
NOTICE OF IDENTICAL DOMAIN NAME APPLICATION BY A THIRD PARTY."
The letterhead identifies the sender as either Electronic Domain
Name Monitoring or Corporate Domain Name Monitoring. The solicitation
warns that an application for a domain name almost identical to
the recipient's has been "submitted to the National Domain
Name Registry (NDNR) for registration," by an unidentified
third party. For example, the owner of a site "www.sobi-sky.org"
was told that an application had been submitted to obtain the domain
name "www.sobi-sky.net" The solicitation says, "Consequently,
it is our opinion that this application may have been submitted
in bad faith. . .." The solicitation lists four reasons someone
might want a copy-cat domain name, including "disrupting the
business of a competitor," or intentionally attempting to lure
someone else's customers by creating a confusingly similar Web address.
The fax solicitation offers to block the application by obtaining
the copy-cat domain name for the fax recipient for a fee of $70.
It warns that, if the consumer fails to act, "NDNR WILL NOT
BE LIABLE FOR THE LOSS OF DOMAIN NAME LICENSE, IDENTICAL OR CONFUSINGLY
SIMILAR USE OF YOUR COMPANY'S NAME; OR INTERRUPTION OF BUSINESS
ACTIVITY OR BUSINESS LOSSES."
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