Domain customers chagrined by registration glitches

Having complained about the lack of competition in the domain registration business, many entrepreneurs are discovering that market choice alone doesn't guarantee better service.

5 min read
Josh Bond, a Weather Channel software technician in Atlanta, had pinned his hopes on two domain names he believed would someday fetch a small fortune.

In a day, those hopes were dashed when he learned the Web addresses he purchased with BulkRegister.com suddenly belonged to somebody else.

BulkRegister, owned by Baltimore, Md.-based Alabanza, today acknowledged the mistake and vowed it would never happen again. But the promise brings little comfort to Bond, who will likely lose out on the addresses for good.

"I bought the names, I got a confirmation, I was charged for them on my credit card," Bond said. "I don't know how this could have happened. I'm powerless. It's not a very good feeling being powerless."

Bond is among a growing number of consumers who, in the past several months, have wound up furious and frustrated while attempting to register Internet addresses. Having complained for years over the lack of competition in the domain registration business, many would-be Net entrepreneurs are discovering the hard way that competition and choices alone do not guarantee better service or greater accountability.

Many of the recent problems are minor and can be traced simply to the heavy demand for domain names sparked by speculators hoping to sell coveted names for a tidy profit. But domain name buyers like Bond have also found themselves vulnerable thanks to policies that seemingly protect domain name registrars at the expense of consumers.

According to attorney Connie Ellerbach, a partner in the Palo Alto, Calif., law firm Fenwick & West, domain registrars typically enforce a service agreement that essentially clears them of any liability. The service agreements are broad, and address situations such as access delays, access interruptions and processing of applications.

That leaves consumers with little recourse.

"Basically it says you agree that you have no cause of action against the registrars if they screw up," Ellerbach said. "Consumers have very little protection."

Getting a domain name is one of the first steps in establishing an online identity. It has been estimated that global domain name registrations will rise to 140 million names by the end of 2003 from about 11 million registered through the end of September 1999.

The business of registering domain names was opened to competition only nine months ago. Before, registrar Network Solutions operated as a monopoly under contract with the U.S. government giving it exclusive right to registered coveted ".com" addresses, along with ".net" and ".org."

See related story: ICANN running out of money Now there are 23 registrars accredited by the body that oversees the Internet's address system, called the Internet Corporation for Assigned Names and Numbers (ICANN). Most registrars charge between $50 and $70 to register a name for two years, with a $35 renewal fee. BulkRegister customers get a significant discount, $10 per name, per year, if they register multiple names.

With more companies interested in getting into the domain name business, obtaining accreditation does not appear difficult. It takes, among other things, a $1,000 application fee, a solid business plan and a clean criminal history, according to the ICANN Web site.

BulkRegister.com is one of the latest registrars to go online. Since its launch last month, the company has registered 4,600 names, said Tony Keyes, who will take over as executive director in February.

"The success has outpaced our ability to provide good service," Keyes said. "We aren't certain what exactly transpired, but it won't happen again. If it turns out that our customers were the first to register the names, we'll go to bat for them."

While ICANN, the non-profit body that oversees the domain name system, has set up policies regarding trademark disputes, it stayed clear from any other type of consumer complaint.

"We are not a regulatory agency and have no statutory authority to intervene in a retail dispute," ICANN president Michael Roberts said. "The registrars have a contract with us and they have to observe good business practices. If we see a credible pattern of abuse by a registrar, then we will look into it and it could affect their accreditation."

In other words, consumers like Bond and Chris Stewart of Ontario, Canada, who also lost domain names with BulkRegister.com, have only a few options: complain to the Better Business Bureau or to ICANN. But no matter what, it is unlikely the domain names will be returned if already sold to somebody else.

"It's like buying a fine wine at the store," Roberts explained. "When you go up to the counter to pick it up you notice that another customer is walking out the door with the bottle and he's not about to give it back."

That's about how Steve Thompson of British Columbia sees it. Thompson bought the Fashionshop.com domain sometime Monday, the same name Bond thought he owned.

"We have plans for the name," Thompson said, without disclosing what those plans are. "I am secure in its ownership and I'm not going to give it up. Mr. Bond will have to take it up with BulkRegister. I'm not going to take any part of it."

It remains unclear what happened in the time Bond bought the domains and Thompson saw that they were available.

But BulkRegister's Keyes said speculators racing to pounce on catchy domain names that were expiring could have flooded the system, causing it to temporarily break down. Kids.com was one of the popular addresses up for sale last week.

Speculators--sometimes called cybersquatters--are entrepreneurs who seize on the opportunity to buy Web addresses that are easy to remember; it's like owning choice real estate on New York's Madison Avenue or Beverly Hills' Rodeo Drive. The resell value is great.

Take Business.com, for example: It sold for a cool $7.5 million in November.

For others, however, domain names are much more than merchandise. Start-up companies spend hours building business models around a domain name and pour a lot of money in advertising to establish a presence on the Web.

But unlike the fine wine in Roberts' example, consumers never actually own the names; they merely rent them for a period of time, forcing owners to re-register. If they forget, they lose the name.

This week Network Solutions, Register.com and other registrars extended the expiration date for domains from two years to 10. The longer time frame should create more stability as Web operators won't have to worry about re-registering their online addresses every two years.

Even managers of large corporations have encountered problems with the short expiration date. During the Christmas holiday, for example, an apparent computer glitch showed that Microsoft had not paid it's $35 bill to re-register its Hotmail domain name. A Linux computer programmer ended up paying the fee and over the past weekend, he received a $500 thank you check from Microsoft.

Computer bugs have also frustrated consumers lately.

On occasion, the new universal software operated by Network Solutions that is used to reserve Net names goes on the blink, blocking transactions and preventing consumers from knowing whether a particular domain name is available.

The incident happened in late December, and again on Friday.

Then, earlier this month, registrars recalled hundreds of domains because they began or ended in hyphens--not allowed under domain name protocols.

"For the sake of the industry, I hope all these things will get ironed out," said Ross Rader of Tucow.com, a domain name registrar in Toronto, Canada. "It doesn't make the registrars look good as a whole."