Governments have proposed stricter background checks on new top-level domain operators that could capture some of the industry’s biggest players.
Top-five registrar Network Solutions and .com manager VeriSign may have reason to be concerned by the latest batch of Governmental Advisory Committee recommendations.
The GAC wants checks on new gTLD applicants expanded to include not only criminal convictions and intellectual property violations but also government orders related to consumer fraud.
The GAC advised ICANN, with my emphasis:
The GAC believes that the categories of law violations that will be considered in the background screening process must be broadened to include court or administrative orders for consumer protection law violations. If an applicant has been subject to a civil court or administrative order for defrauding consumers, it should not be permitted to operate a new gTLD.
This is not new – the GAC has proposed similar provisions before – but it seems to be the only GAC advice on applicant screening that ICANN has not yet adopted, and the GAC is still pushing for it.
Why could VeriSign and NetSol be worried by this?
One reason that springs to mind is that, back in 2003, NetSol was officially barred by the US Federal Trade Commission from the practice known as “domain slamming”.
Domain slamming, you may recall, was one of the dirtiest “marketing” tactics employed by the registrar sector during the early days of competition.
Registrars would send fake invoices with titles such as “Renewal and Transfer Notice” to the addresses of their rivals’ customers, mined from Whois data.
The letters were basically tricks designed to persuade customers ignorant of the domain name lifecycle to transfer their business to the slamming registrar.
Respectable registrars have nothing to do with such practices nowadays, but a decade ago companies including NetSol and Register.com, the two largest registrars at the time, were all over it.
At the time NetSol was carrying out its slamming campaign, it was part of VeriSign. It was spun off into a separate company earlier in 2003, before the FTC entered its order.
The order (pdf) was approved by a DC judge as part of a deal that settled an FTC civil lawsuit, alleging deceptive practices, against the company.
NetSol was not fined and did not admit liability, but it did agree to be permanently enjoined from any further slamming, and had to file compliance notices for some time afterward.
It seems plausible that this could fall into the definition of a “civil court or administrative order for defrauding consumers” that the GAC wants added to the Applicant Guidebook’s background checks.
Whether the GAC’s advice, if implemented by ICANN, would capture NetSol and/or VeriSign is of course a matter of pure speculation at the moment.
I think it’s highly unlikely that ICANN would put something in the Guidebook that banned VeriSign, its single largest source of funding (over a quarter of its revenue) from the new gTLD program.
Sadly, I think I may also be unfairly singling out these two firms here – I’d be surprised if they’re the only companies in the domain name industry with this kind of black mark against their names.
Existing background checks in the Applicant Guidebook governing cybersquatting are already thought to pose potential problems for registrars including eNom and Go Daddy.