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Network Solutions sued for price fixing

  Class Action  -   POSTED: 2008/02/26 17:56

Network Solutions is being sued for front-running internet domains. In early January, the well-known domain registrar started self-registering domains that customers search for but don't immediately buy. The company insists it's merely trying to crackdown on so-called "domain front running," but at least one customer is clever enough to realize this argument makes no sense.

Today, domain hunter Chris McElory chucked a federal class action lawsuit at Network Solutions, insisting that the Comcast of domain registrars uses "fraudulent and deceptive business practices to effectively trap consumers into paying its grossly inflated domain name registrations fees".

In the words of Brian Kabateck, one of McElory's lawyers, Network Solutions is guilty of "a very sophisticated form of price fixing". We take issue with the "very sophisticated" bit.

If you visit the Network Solutions website and show interest in a domain without actually putting your money down, the company will quickly register the address under its own name. For the next four days, you can still purchase the address from Network Solutions, but you can't purchase it from any other registrar.

Back in January, for instance, one loyal Reg reader searched the site for "," and minutes later, he discovered that "network-solutions-registers-all-names-searched" belonged to none other than Network Solutions. Meanwhile, other readers have pulled this trick with domain names that describe the company's behavior in very different terms.

Though it won't speak to us, Networks Solutions tells others that by self-registering domains, it's protecting customers from cybersquatters on the lookout for highly marketable urls. "In response to customer concerns about Domain Name Front Running (domains being registered by someone else just after they have conducted a domain name search)," the company has said, "we have implemented a security measure to protect our customers."

So, Network Solutions is front running domains in an effort to prevent other outfits from front running. And judging from a recent ICANN study, those other outfits don't exist.

And even if they do exist, Network Solutions' little trick doesn't prevent them from front-running. It merely forces them to spend their dirty dollars with Network Solutions. Network Solutions claims that it would never sell domains to front runners, but we question its ability to identify front runners. After all, it has failed to identify itself.

The company claims that these mysterious front runners are also "domain tasters," those clever characters that temporarily register thousands of domains just to test their "marketability." And it wants the world to know that if ICANN would just prevent people from returning addresses within five days for a full refund, it will quit self-registering domains.

But this is merely stating the obvious. If ICANN removes the five-day full refund, Network Solutions couldn't self register domains without paying good money for them. And it won't pay good money for them.

As Chris McElory's suit says, Network Solutions' self-registering trick is merely an effort to make some extra dough. If customers search on a name but don't immediately buy, his complaint says, they "cannot register their domain name through any of Network Solutions' less expensive competitors because their chosen domain is unavailable through any other service - which (unbeknownst to the customer) is now held exclusively by Network Solutions - who is now offering to sell the domain to anyone willing to pay its grossly inflated registration fee."

The suit even goes so far as to say that Network Solutions isn't the only guilty party. ICANN is also named. "ICANN rules tacitly say that Network Solutions practice is acceptable," Kabateck told us. "We aren't seeking damages against ICANN. We just want a declaration from the court that its allowing this to go on."

What does Kabateck think of Network Solutions' claim that it's merely trying to destroy domain tasters? "Maybe I'm stupid, but I don't get," he says. And we can assure you he's not stupid.

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