What’s in a Name?

Buying domain names of real live people can be manna to the unscrupulous.

Anne Fognano is not a newbie in the online marketing world. She has run a successful affiliate business since 1997. She’s the force behind CleverMoms.com and has registered a raft of variations on the "clever moms" domain name to safeguard her valuable brand. But she never bought the domain for her own name – AnneFognano.com. When someone else did, all hell broke loose.

While domain squatting is as old as the Internet itself, the practice of buying a dot-com name and waiting for someone with a bag of cash to offer to buy it from you has lost some of its cachet – especially since pretty much all the good common names and brand names are taken these days.

However, this hasn’t stopped some folks from getting creative. Many call it "domain extortion," where someone buys your name, sets up a rudimentary Web page of you with dummy copy and then contacts you to sell you services such as Web design, hosting and other services for bloggers. This is what exactly what happened to Fognano.

"Not much I can do about it," she says, "because I don’t have my name trademarked." Since she is not a "public figure" like George Clooney or Paris Hilton, it makes it harder to make a case that her image has been co-opted for monetary gain. The FBI and her local District Attorney’s office in Virginia told her that unless she could prove that someone was looking to profit from her name, they could do little. Besides, they told her, the payout would be so little that it wasn’t worth the authorities’ time.

Domain parking in general is fairly big business, thanks in part to the popularity of PPC programs. Anyone can buy a domain that is either a name someone may type into the address bar or is a misspelling of a brand name (called typosquatting) and put nothing but Yahoo or Google PPC ads on the sites. The ads on these types of sites actually generated $400 million in sales in 2006, according to Susquehanna Financial Group, and looks to hit the $1 billion mark by the end of 2007.

Updated Version of Cybersquatting

In the domain extortion variation, someone grabs a name of a living person who has a blog or is an affiliate marketer for as low as $6 or $8 per name through an inexpensive domain registry such as GoDaddy.com. If the person that bought the domain offers to sell services to the namesake on top of giving them back their name, there’s nothing illegal that’s been done, according to authorities. In addition, the person who registered your name generally gets more than his $8 if you decide to at least take your name back.

In Fognano’s case, she decided to fight back. Going to the popular online forum for affiliates, ABestWeb.com, she posted her dilemma and let the members know that a "blog consultant, John Kitovitsu" of PurchaseMyBlog.com emailed her to show her what using his services would look like and that she could buy the domain from him. ABestWeb members, a large, vocal and tight knit community of savvy online marketers, suggested sending him a "cease and desist" letter to remove the content, which include her image and an article taken from Revenue magazine. They also suggested bringing him up before the Internet Corporation for Assigned Names and Numbers (ICANN) and even paying him a personal visit. ABestWebbers also helped her document all the text and images on the fake site and tracked down the IP address for the hosting company serving up the site. They also determined there was no business active on the Web using the PurchaseMyBlog name.

Not a Crime?

Fognano called the local police, the FBI, her local District Attorney and even the dubious website’s hosting company (in Germany). Since "Kitovitsu" had also set up a WordPress blog page for her without her permission, she got WordPress to pull down the page for violation of their terms of service. Fognano said the FBI pulled the site for her and said it would put an "FBI investigation tag" on the website. "I actually didn’t care that much," she said. "How many people are going to type my name [directly into the address bar]? But only when they use my name and image is it a big deal."

Thus far, the authorities she contacted are not calling this a crime. New York State recently signed a law providing a $1,000 fine per day for violation of people registering domain names of known people purely to sell them their own names for profit. The law goes into effect in early 2008. While it is not known if other states will follow suit, the terms may be just vague enough not to quash the practice entirely.

"It’s almost like they are taking your identity," Fognano says. "It seemed strange that it isn’t a crime."

Domain name registrars say they can only do so much. In 1999, the Ninth Circuit Court of Appeals ruled that registrars, such as Network Solutions, could not be held liable for registering a domain of a "known trademark." Network Solutions – which used to be the exclusive registrars of domain names in the U.S., says it used to purge "domain speculators" from its registry, especially those who registered thousands of domain names at a time. But it adds that most domain names can only be reclaimed if those who registered the names do not pay on time.

After inquiries were made, Fognano heard again from "Kitovitsu." "It’s not our intention to pose as you or use your blog for material gain," the email said. "If you decide to join our network we can have a professionally designed template made to enhance the look and feel of your blog."

"Oh, I see. It was a sales pitch," said a poster on her thread at ABestWeb. Another poster wrote that it sounded like "a scam with a bit of extortion thrown in."

Registrars and Revenue

Now that lower-cost domain name registering companies such as GoDaddy.com have entered the field, the competition for registration fees is much greater. There are hundreds of accredited registrar companies internationally that deal in the more popular .com, .net, .biz, .org, .edu and .mobi top-level domains. A new domain is registered at GoDaddy.com every 1.3 seconds, the company says. That figure comes to 12.8 million domain names every five months, according to Netcraft, up from 7.5 million in a five-month time frame last year.

Selling parked domains is also still big business. Business.com famously sold in 1999 for $7.5 million. Sex.com changed hands last year for a reported $14 million, although some reports said it was more like $11 million. Domain name sales generated $29 million in 2005, according to Zetetic. Some are just in it for the names. NameMedia, for example, apparently has more than 750,000 domain names in its marketplace. Sedo.com also acts as a kind of eBay for the domain space, selling $3 million worth of domain names per month.

"A domain name isn’t something you own, it’s just something you have a right to use," says Elizabeth Beal, director of the Communications Law Centre at Victoria University in Canada. "So it’s not like [a cybersquatter] has been using somebody else’s property."

In this age of security, some companies are enhancing their products and discovering revenue streams in the process. Retail domain name registrar Dotser offers "domain name security" with its NameSafe and TransferLock products. NameSafe restricts actions such as account updates, name server updates, contact name changes, domain account changes and registrar transfers without prior authorization through email. They charge a small annual fee for the service. Its TransferLock prevents domain name transfers without being logged in to your account. This service is free. Dotser itself, however, was named in a typosquatting lawsuit by retailers Neiman Marcus and Bergdorf Goodman a few years ago, saying that Dotster put up ad-filled pages in misspelled domains of the retailer’s name and then only paid to keep the misspelled URLs that were generating any revenue. This is called domain kiting.

Some critics also charge that the extra fee-based services don’t prevent someone from snapping up your domain if the registrar goes bankrupt or registers a taken name by accident or if the registrar deletes your domain through a process error. That’s what happened to Gary Kremen when Network Solutions was conned into giving up his Sex.com domain – a destination that was reportedly earning him $8 million per year. It took him three years to get the name back, but he was pretty much bankrupt by then.

Because of the competition between retail registrars, it isn’t surprising that companies are trying to entice you to add services or register more versions of a domain than you may need. One variation on the hard sell is getting a fax from a "domain name monitoring" organization stating that someone was registering the dot-net version of a dot-com domain name you owned. Saying they were checking on possible trademark conflicts on domains they have registered, the company offers to register the dot-net domain for you instead. Sometimes the materials are marked "final notice" with that day’s date as the deadline.

Lapses and Losses

Members of ABestWeb also suggested Fognano file a complaint with ICANN. You can make a case and request the domain be transferred to you. In most cases, when you register a domain, you are also agreeing to mandatory arbitration. Arbitrations through ICANN can also be far less expensive than litigation, and the judgments through arbitration can be quicker – about 60 days. While ICANN recognizes the need to keep the processes for transferring domain names tight, it is well aware of the chorus of complaints from those hijacked or extorted. "The registrant may lose an established identity and be exposed to extortion by name speculators," ICANN has stated. "Domain hijacking can disrupt or severely impact the business and operations of a registrant."

Generally there is a process by which a domain name can fall back into the unregistered pool to be snatched up by any attentive domain buyer. You register YourName.com on a given date: 1/11/06. The domain expires on 1/11/07. There happens to be a 30-day grace period to allow for renewal of the domain for the standard renewal price (until about 2/11/07). If that date passes, the domain is tagged as in a "redemption grace period," during which time the domain is put in "registrar hold" and then "pending delete" – about 30 to 45 days, depending on the registrar.

ICANN allows the registrar to charge its own fee for renewal from then on, which could go as high as $160. GoDaddy charges $80 and Network Solutions charges $160. If those fees aren’t paid, the domain name is released into the pool to be bought by anyone.
Rich Miller, blogger at DomainWorks.com, says to treat your domain as a brand. Network Solutions agrees – that domains left to expire run the risk of being co-opted by anyone, it says. Miller says that you should register your domain for more than one year. This way it’s actually cheaper to register and you won’t have to remember to do it every year. There are some who say that domains that have been registered and active for a while get better Google page rankings.

Miller also suggests that you should look for the best registrar, not just the cheapest. Look up the reputation of the registrar. You may not see a difference in the features of a registrar who charges $30 versus $9, but you will see a big difference between the $9 and the $5 registrar. He always recommends registering "alternates" of your name in other top-level domains. If you own the .net but not the .com, the .com owner can trademark their name and potentially force you to give yours up. Also, he says, don’t forget to brand your name within the social networks – set up pages in MySpace and other destinations before someone else does.

And whatever brand name you are operating under, always remember to try to buy your own name as a domain. Recently, Fognano decided she would offer "Kitovitsu" $10 to buy her domain from him. She has yet to hear back from him.