Domain Kiting Hits Extreme

I frequently find myself trying to secure a good domain name for my clients.  Ever notice how all the good ones are taken?  Ever notice that if you try to access them you get what seems like a search engine page with a bunch of links?  Whatever you do, don’t click on any of them!  Doing so only helps encourage the practice of Domain Kiting!

When electronic funds transfers first began to be possible, it didn’t take long for criminals to figure out how to cheat the system.  Put money in A, transfer it to B, transfer it to C, then withdraw it from all three!  If you’ve ever wondered why some banks take 2 or 3 days to “clear” a check, thats why. 

But now some criminals (sorry, that’s what I consider them to be!) have figured out a way to “kite” domain names.  They exploit a loophole in the DNS system that allows a registrant to change their mind and get a refund for a domain name they have registered for up to 5 days.  How do they do it?  Here’s the scoop:

There are now many domain name “registrars”, companies that are allowed to sell and manage domain name registrations for their clients.  They make a small amount on each registration.  Some unscrupulous companies have played on these registrars greed by making sweetheart deals for bulk registrations.  They will deposit something like $600,000 with a registrar (who could turn that down?) and in exchange they have almost unlimited ability to register any available domain.   I have often suspected some of these registrars of selling the “whois queries” to these guys.   In other words, when you go to one of these registrar’s sites to see if a domain name is available, you do a “whois query”.  If the domain name is available and you immediately register it, fine.  If you decide you’ll think about it or check with a client first, chances are – no matter how unique or un-obvious the domain name is – you’ll find its already been taken.  So that implies that data from whois searches is being sold to these domain kiting guys!

So they register a slew of domain names they think might have value.  They set up software on a web server so that it will answer to them all with the same page full of links, and of course an offer to sell the domain – usually at an outrageous price!  Then they get paid for each exposure on the links, and they get paid even more if you click on one.  After 5 days, they programmatically notify the registrar that they’ve changed their minds, they don’t want the domain after all.  Their account gets credited back the registration fee.  Then they apply for the same domain name again!  They keep registering and releasing the domain name so often that the system can’t keep up with it, and they end up camping on millions of domain names forever without ever paying for any of them!

Bob Parsons, who owns one of the largest registrars, Go-Daddy, recently reported that during the month of May, over 35 million domain names were registered, and of that number, 32 million were never paid for.  So this has become a serious problem that ICANN needs to address!

Meanwhile, what can we do?  You can start by not clicking on any of those illegitimate “placeholder” sites full of links!  That only enriches and encourages the bad guys!

Beyond that – contact your local representative!  This ridiculous situation needs to stop!

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