False Solicitations Allegedly Duped Consumers to Transfer Domain Name Registrations
Network Solutions, Inc. has settled Federal Trade Commission charges that its deceptive marketing practices unlawfully tricked consumers into transferring their Internet domain name registrations to the company. The terms of the settlement permanently bar Network Solutions from misrepresenting that a consumer’s domain name is about to expire or that the transfer of a domain name is actually a renewal. The order also requires the defendant to pay consumer redress pursuant to the terms of a previously settled class action lawsuit.
Network Solutions is the largest of more than 100 companies that compete to provide domain name registration services to consumers. These companies, called “registrars,” help consumers establish the addresses for their Internet Web sites. Consumers choose a second-level domain name for generic top-level domain names such as .com, .net., and .org (e.g. www.networksolutions.com) and Network Solutions registers that domain name with the appropriate “registry.”
The FTC’s complaint alleges that, as part of its marketing campaign, Network Solutions mailed solicitation notices to consumers that appeared to be expiration notices from the consumers’ current registrars. The notices allegedly stated that consumers’ domain names were about to expire, and that Network Solutions was offering to “renew” their domain names for a fee.
The FTC alleges that these notices were deceptive for two reasons. First, the notices claimed that the consumers’ domain names would soon expire, but failed to disclose the actual expiration dates of the consumers’ domain names – which were, in some cases, months or years in the future. Second, the notices offered to “renew” the consumers’ domain names without disclosing either the identity of the consumers’ then-current registrars or that accepting the offer would cause the domain name to be transferred to Network Solutions. The FTC charges that the notices tricked some consumers into transferring their domain name registrations to Network Solutions – often at a significantly higher price.
The stipulated order permanently prohibits the defendant from misrepresenting that: a consumer’s domain name registration is about to expire; the expiration date of a registration is near or on the date by which a consumer must respond to the Network Solutions solicitation; and that the transfer of a domain name registration is only a renewal. The settlement also requires the defendant to state clearly and conspicuously in any written or oral communication with consumers the date on which the consumer’s registration will expire. The order also requires Network Solutions to pay consumer redress in accordance with a class action lawsuit it recently settled. Finally, the settlement contains standard recordkeeping provisions to assist the FTC in monitoring the defendants’ compliance. At the time that the solicitations that are the subject of the FTC's charges were mailed, the company was doing business under the name "VeriSign."
The Commission vote authorizing staff to file the stipulated final order was 4-0-1, with Commissioner Pamela Jones Harbour not participating. The order was filed in the U.S. District Court for the District of Columbia on September 11, 2003, and was entered by Judge Ricardo M. Urbino on September 12.
NOTE: This stipulated judgment and order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Stipulated judgments and orders have the force of law when signed by the judge.
Copies of the stipulated judgment and order are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
(FTC File No. 0223231
Civ. No. 03 1907)
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