FTC Warns About Top-Level Domain Scams

The U.S. Federal Trade Commission (FTC) warned consumers on Thursday to beware of companies offering to pre-register Web sites with as-yet unapproved TLDs (top-level domains).

Calling pre-registration programs "a new scam," the FTC warning letter advised consumers "to protect themselves by avoiding any domain name pre-registration service that asks for up-front fees, guarantees particular top level domain names or preferential treatment in the assignment of new top level domain names."

Domain names are Web site addresses, like www.idg.net or www.whitehouse.gov. Top-level domains are the ending suffixes for addresses, like .edu, .mil, or .com.

The Internet Corporation for Assigned Names and Numbers (ICANN), the nongovernmental standards body for administering the domain name system, is considering additions like .web, .biz and .nom to the family of domain names at its annual board meeting this week in Marina del Rey, California. The ICANN board scheduled a vote for Thursday on adopting the new TLDs.

"Because ICANN has not yet announced its intentions, it is misleading for any service or entrepreneur to offer pre-registration or accept fees for domain names that may never come into existence," the FTC letter noted.

Companies hoping to administer a new TLD submitted proposals to ICANN outlining the criteria for customers to register Web sites, along with a description of the company's technical and financial qualifications. ICANN's staff narrowed the field of likely contenders from 191 TLDs to 10 in a report released Friday.

Similar warnings about pre-registration issued earlier by ICANN prompted a lawsuit by domain-name pre-registrar RegLand Inc. in a Texas district court. RegLand's suit alleges "defamation, business disparagement and tortuous interference," according to Scott Harris, RegLand's chief executive officer whose company is based in San Antonio, Texas.

Harris said the FTC is misinformed about the nature of his company and denied it was a scam, noting that he makes it clear to customers that pre-registration is speculative.

"There are people who have made millions on real estate ... that's how I feel about domain-name speculation, it's just like real-estate," he said. "All we're trying to do is maximize a customer's chances of getting the domain name they want. We agree that we'll submit their domain name application promptly, and we've said that if a customer pre-registers a domain name that isn't approved, we'll hold the application at the customer's discretion until the TLD is approved."

A customer with an unapproved domain name will be able to transfer it to an approved TLD without service charges, he added. "We want to show the Internet community that we're here to provide a service, not to scam people out of $20."

ICANN has issued a rebuttal statement to RegLand's lawsuit on its Web site.

"ICANN believes that it is entirely appropriate to alert the public that no TLDs have been selected and that no company -- including RegLand -- is yet authorized to be selling domain names in new TLDs," said ICANN in a statement posted on its Web site regarding the RegLand suit. "These statements are entirely true and are designed to caution consumers who may be mislead into believing that they have actually registered a name in a TLD that does not yet exist."

The FTC can be contacted at 1-202-326-2222 or at http://www.ftc.gov. ICANN, in Marina del Rey, California, can be contacted at +1-310-823-9358, or http://www.icann.org. RegLand, in San Antonio, can be reached at +1-210-495-9800 or http://www.regland.com/.

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