The domain name industry is grappling with regulatory measures which it hopes will help eliminate marketing practices of certain domain name resellers which have been labelled by some as being misleading and deceitful.
Assessing the renewal of domain names has opened a can of worms for government and Internet regulatory bodies as small businesses are being targeted for domain renewal by resellers who have no previous dealings with the company they are selling to.
In one such example, a reader contacted ARN after being faxed an offer to renew the company's domain name before it expires in July. The reseller, who had no previous dealings with the reader's business, had access to a lot of infomation about the company, including its domain name, postal address and the expiry date of its domain name.
"We were asked to sign the return fax as a formal order, which we declined to do, but indicated our interest," said the reader. "Within two days we were presented with a Tax Invoice, for a two-year price of $220 - and a request for payment within 48 hours."
The apparent ease with which a person can be deceived by such a practice was recently addressed in a consumer warning published by Chris Disspain, CEO of the Australian Domain Authority (auDA). Disspain advised businesses and individuals not to assume any renewal letter or invoice is from their original supplier, and to only pay any supplier after comparing their rates and terms and conditions with other resellers.
Although auDA is concerned about such practices, it does not have the power to prevent it. "At present, regulating this activity is an ACCC matter," said Disspain. "But when we introduce competition, we will put in place rules and regulations to prevent it. The resellers will all be regulated by agreements with us. We will be able to withdraw their operating license if they misbehave."
A spokesperson for the ACCC said it had received a number of complaints about this and similar practices, but said it has to take any complaint on face value. Any public action taken before a comprehensive investigation could harm a legitimate player, the spokespersn said. The ACCC is empowered to regulate such activities under part five of the Trade Practices Act, which is designed to protect consumers who claim to have been 'misled' and/or 'deceived' by a practice.
One reseller who specialises in domain renewal is the Internet Name Group (ING). ING's Mark Spector defended the practice of sending out renewal forms to companies it has no prior dealings with, suggesting it is a common practice in many services industries. Spector said ING only sends the business or consumer a tax invoice if they submit some sort of reply to the reminder notice.
"It is not misleading because it specifically states who we are on the form," he said. "Consumers have the choice the whole time of whether they choose to use our service or not."
Spector also argues that telecommunications companies utilise a similar strategy to win market share from their competitors. For example, a Telstra mobile phone subscriber may receive a marketing brochure from Optus informing them of the opportunity to renew their subscription with Optus at a better rate.
What draws suspicion about such a practice among regulatory bodies and consumers is that such an offer is not always at a better rate. The aforementioned ARN reader, for example, discovered the offered rate of $220 for two years was a 'mouthwatering uplift' on Melbourne IT's retail price of $137.50.
"In any year that is an exciting figure, but in 2001 it is simply a staggering return for the production of a couple of faxes," the reader said.
Spector argues such prices are competitive, when comparing to the high prices charged by telecommunication companies like Telstra and media companies like Fairfax. "Many other resellers may be cheaper but it is only because they are actually ISPs and offer domains at below cost to sell you other services," he said.
Another issue of concern is how organisations are able to access that data which reveals what domain names are due for revision, as well as the contact details of the registrants. Disspain said it is most likely the information was acquired through the Australian Network Information Centre (AUNIC) database, which according to Disspain was shut off from public use late last year. However he said it could also be through acquiring old customer lists, the reseller is retrieving data from each business one-by-one or by hacking into auDA's systems.
While Spector was not going to make the nuances of his business plan public, he pointed out that data he has accessed is easily accessible from the AUNIC database (at www.aunic.net). ARN found that the contact details and expiry date of any .com.au domain name is easily retrieved from this site. "All the information we get is publicly available," he said.
Spector is unconcerned that Government-endorsed agencies such as auDA and the ACCC are investigating the matter and issuing consumer warnings. "It's a good thing, in my opinion, that the ACCC and auDA are releasing statements like these and are educating the public. We are trying to educate the public about their choices too."
"We've been in touch with auDA and the ACCC," he said. "We have no problem with them and they have no problem with us."
Spector claims 30 to 40 per cent of domain names expire, and registrants don't realise their error until the following month. In that respect, he considers a renewal notice from a company they have never dealt with to be somewhat of a community service. "Many people thank us after we remind them," he said.
However, Disspain said it was not only consumers who are at risk from such practices, but also legitimate domain name resellers. "Legitimate resellers get very annoyed about this," he said. "We have received a number of complaints."