FTC goes after domain broker

An Australian company's Net domain registry, at "www.internic.com," is under fire by the Federal Trade Commission today.

The federal agency says the Aussie company, Internic Software, is misleading surfers who intend to register domains at the official InterNIC registry at "www.internic.net." Some Net users complained in July that they had paid the "copycat" site $250 to register a domain name. The actual InterNIC charges $100 for the same service.

Virginia-based Network Solutions, which currently administers the InterNIC, asked the FTC to investigate the matter. Network Solutions has an exclusive contract with the National Science Foundation until March 1998 to register top-level domain names such as ".com," ".edu," ".net," and ".org."

According to the FTC, Internic Software acted as a "broker" for consumers and promised more than 2,000 buyers that their domain names would be registered with the real InterNIC. But the FTC says the site didn't adequately disclose how its business worked, meaning many consumers paid more than they otherwise would have. Network Solutions says most of the domains were never registered.

The FTC response to Network Solutions' request was also sent to the Australian Competition and Consumer Commission, which is now investigating Internic Software, according to the agency. In addition, Australian officials have been asked by the FTC to recover the estimated $500,000 consumers paid to Internic Software.

"We have authority over anyone who engages in commerce in the United States," David Medine, the commission's associate director for credit practices, said today.

However, it remains to be seen what impact, if any, the FTC will have outside of its national jurisdiction. "We hope that the Australian commission can get refunds for everybody who was victimized. Consumers also have a chance to dispute the charge with their credit card companies," Medine added.

The FTC says it is deceptive for the Australian company to "offer broker domain name registration services, accept payment for such services, and then fail to pay the official registry of domain names." The letter also asserts that the agency has the authority to go after the Australian company if U.S. consumers were harmed.

"Advertising and providing Internet domain name registration services through the Internet site located at 'www.internic.com' is likely to violate the Section 5 of the FTC Act's prohibition against deceptive acts or practices," the agency's staff letter states.

When consumer complaints began surfacing in July, Internic Software posted a new, more prominent disclaimer stating that it was not the official InterNIC. Prior to that, however, the disclaimers were in bold text at the bottom of the home page, where they could be more easily missed.