[ga] Proposed ICANN "Expedited Transfer Reversal Policy" could disrupt secondary market for domain names

[George Kirikos <gkirikos@xxxxxxxxx>]

Hi folks,

ICANN, in typical fashion, released an important policy report today (a 
Saturday during the US Memorial holiday long weekend) that folks might not 
notice until it's too late. It's regarding the work from the Inter-Registrar 
Transfer Policy Working Group, and the report is at:


http://www.icann.org/en/announcemen...-29may10-en.htm

What's especially of concern is the proposed "Expedited Transfer Reversal 
Policy" (ETRP, see Annex C of the PDF, page 49) which would permit the 
registrant at the "losing" registrar to undo a transfer for up to 6 months 
after a transfer. There is currently no mechanism to dispute the proposed ETRP.

This proposal would create great uncertainty in the secondary market for domain 
names, as it means a "transfer" isn't considered final for up to 6 months after 
a purchase, assuming one changes registrars during a transaction, which is 
almost always the case.

Here's the typical pattern of a purchase. Example.com is registered at RegA, 
and you want to buy the domain name, but transfer to RegB during the 
transaction (RegB might be your "home" registrar (Tucows for me), or might be 
Moniker who does escrows, etc.). At present, the seller would get paid 
immediately after the domain name transfers from RegA to RegB, and you'd have 
control of the domain name at your preferred registrar (RegB). If there was a 
dispute, it would go to court, etc., and RegB would await a court ruling. The 
good faith buyer is definitely protected.

Under ETRP, though, it would be a nightmare. How would the buyer know for sure 
that he/she has control and ownership of the domain name, when the seller could 
simply undo the transfer for up to 6 months??!!?? The seller would end up with 
both the cash AND the domain name, and the domain name would be at RegA (a 
registrar you don't want the domain name to be at). You as the buyer would then 
need to take the seller to court, and the relevant jurisdiction would no longer 
even be that of RegB (your preferred registrar), but would be that of RegA.

A Moniker or other company that uses their own registrar to ensure a secure 
transfer would not be able to help at all, because they are "RegB." All the 
power reverts to RegA (the original "losing" registrar). Not only that, the 
registrant at RegA indemnifies RegA itself, so RegA doesn't even care if they 
are "stealing" back a legitimately purchased domain.

One approach to try to "solve" this problem, as a legitimate buyer, would be to 
transfer the domain name at RegA first. So, for example, if the domain name is 
at GoDaddy or NSI, you would do an internal change of registrant transfer, 
keeping the name at that registrar. However, then you are stuck for 60 days, as 
most of these registrars have been trying to hold the domain name hostage for 
that amount of time, to get extra renewals, etc. So, for 60 days you are in 
limbo at a registrar that you don't like, and one that is probably not in the 
legal jurisdiction you want to be in (e.g. GoDaddy = Arizona jurisdiction, 
which would not be good). During that 60 day period, do you really have full 
control of the domain name? I would say "No", because you (as the legitimate 
buyer) would face the possibility of the transfer being undone by a registrar 
that you don't want to be at.

Anyhow, this is a very messed up proposal. If you look at DailyChanges.com or 
RegistrarStats.com, you'd quickly see that transfers make up roughly the same 
number of daily transactions as new registrations. So, it's very important that 
any changes that would have such a major impact on the secondary market for 
domain names be well thought out.

If one looks at the composition of those who were on the workgroup:


https://st.icann.org/irtp-partb/index.cgi

(see the bottom) it appears most do not even understand the grave impact such 
changes would have on the secondary market (which is probably greater in 
economic value than the primary market). I'm all for fighting domain hijacking, 
but this "solution" is far worse than the problem it is trying to solve. There 
needs to be a secure and predictable procedure for the irrevocable transfer of 
a domain name to a legitimate buyer, yet ICANN is now making the process less 
predictable and more risky for the buyer. The legitimate buyer would face at 
least 60 days (and up to 6 months) of risk without due process if the proposal 
is accepted.

What's even more appalling is that ICANN didn't even open up a comment period 
yet, so that folks could get their opinions on the record! The comment period 
won't begin until July 5th, and will last only 20 days. This is silly, given 
that it costs $0 to open up the comment period now.

In the meantime, I encourage folks to contact their registrars to make sure 
that your voices are heard, and perhaps blog about the issue if you have a 
blog, etc.

Sincerely,

George Kirikos
http://www.leap.com/