Aussies lose domains in Web host scandal

An unknown number of Australian companies and consumers have lost their Web sites -- and renewal fees -- hosted by a US-based company.

Web sites hosted by US-based Web host RegisterFly have been disappearing in dribs and drabs over the past year. The domains are "parked" -- generally when they have expired, but attempts to renew the domain by paying the fee mysteriously fail.

Justin Kulhawick is a former RegisterFly customer who has fielded an estimated 10,000 unique complaints about the company through www.RegisterFlies.com, since he set up the site a year ago. "I get e-mails every day from people begging me to help them," he told ZDNet Australia.

RegisterFly has a million customers -- hosting two million domain names and 300,000 Web sites -- in 120 countries.

Kulhawick alleges that other Web hosts are doing the same thing: parking domains and creaming off the renewal fees. He said some are apparently also reselling the domain names to others to test -- falsely creating customer "churn" to make more money.

"I can tell you it's a tightly-knit group that has seen the dollar signs," he said. "If a domain name gets 10 hits a day, they can manage the traffic and do a click every couple of days, at US$6/month, and it's on the high end of Google ... two, three, five clicks and you've got a million."

Add all the customers and domains up, Kulhawick said, and many millions of dollars could easily be made. "That's a scandal. That's the size of [notorious white collar fraud case] Enron."

E Clarke Dummit is a US attorney spearheading a class action lawsuit in the US Federal Court against RegisterFly, its CEO Kevin Medina, another director John Naruszewicz and sister companies Unifiednames and Hosting Services Group as well as fellow registrar eNom and ICANN (Internet Corporation for Assigned Names and Numbers).

Dummit said at least five or six Australian companies or consumers have signed up to join the lawsuit -- and more from all over the globe are joining daily.

Dummit said 75,000 customers had already lost their domains, and funds ranging from US$10 to US$100,000. But some losses were unquantifiable, because people's businesses had been shut down without warning, with no way of communicating that fact to their customers.

"We're pursuing an injunction to shut the Web site down and are also suing for damages," he said. So far there are 700 plaintiffs. Dummit expects to have a trial date within a year.

ICANN registration questioned
But he also blamed ICANN. "We consider that ICANN has completely breached its duty to protect the public," Dummit said.

He alleged that RegisterFly's ICANN accreditation was revoked on 16 March. ICANN also took out a temporary restraining order against RegisterFly a month later, on 16 April, but, according to Dummit, "they've still not done anything; RegisterFly is still operating".

"They should have shut the Web site down months ago," Dummit said.

Kulharwick agreed: "How did RegisterFly even get accreditation in the first place?"

ICANN -- which collects a fee for every domain sold through accredited registrars -- did not say it would terminate RegisterFly's accreditation until the day after being served with the class action lawsuit, according to Dummit.

ICANN was contacted for comment but had not replied at press-time. A blog comment on ICANN's Web site, aimed at helping customers transfer away from Registerfly is available here.

According to a statement released by ICANN on 17 April, RegisterFly on 16 April was ordered by the US Federal Court to hand over accurate data for all of its domain names to ICANN.

RegisterFly is still ICANN-accredited, the statement said. As long as it remains so, ICANN needs RegisterFly's cooperation to do any bulk-transfer of customers to another Web hosting company.

RegisterFly's Web site on 20 April was still operational and still claimed ICANN accreditation. At the time of writing, it was still advertising for new customers and inviting users to purchase "parked" domain names.

Dummit said that customers were also finding it tricky to simply transfer their accounts. Needed authorisation numbers had been withheld by either RegisterFly or business partners such as fellow registrar eNom. Meanwhile, many related customer records were also incomplete -- meaning that some people might lose their domains with no realistic hope of redress, he alleged.

A source close to RegisterFly who requested anonymity has alleged that RegisterFly is making between US$5,000 and US$15,000 a day.

Australia-based RegisterFly customers in recent months have posted requests for help on local broadband forum Whirlpool, complaining of lost funds and problems renewing their domains.

Up to six affected Australian customers -- some business, some personal -- were contacted by ZDNet Australia but five were not available at press time. One -- Brown Bear Internet -- has already successfully transferred all its customers' domains to another registrar.

RegisterFly did not respond to requests for comment.