[ga] registrar payment practices

[Danny Younger <dannyyounger@xxxxxxxxx>]

Pleased to see discussion emerging on registrar
payment practices that impact registrants... the
following is from today's exchange on the registrars
list.  Let's hope that registrar discussions leading
to revisions of the RAA commence sometime soon...

[Connelly]:  Those of us who were on the ill fated
"Code of Conduct Task Force" felt that there should be
a requirement that registrars taking multi year
registrations should pay the registry immediately for
the full registration paid for by the registrant.

Over the years, we have had some vigorous debates over
this issue in the RC meetings.  To me, it was
analogous  to taking out a "twenty pay year" life
insurance policy and paying the broker for the first
ten years -- with the broker paying the insurance
company a year at a time.

When we had a run of five and ten year fraudulent
registrations a couple of years ago, I was able to see
the point of putting through the first year
registration and waiting long enough for the chances
of a Chargeback to elapse before paying for the full
contract.

I can see two incentives for delaying payments beyond
the chargeback issue,  1. building cash flow and 2.
the expectation that registry fees would go down with
time.  I certainly had expected them to do so.  Those
of us in Core thought the six dollar fee to Verisign
was very excessive.  

However, not only have the registry fees *not* gone
down (except .net), they have gone up.  In addition, a
very hefty ICANN fee has been added.  Registrars
holding back on full payments for multi year
registrations will be hit with a shortfall at some
point.  Since the RegisterFly.com problem, we can all
see the risks of building cash flow by such methods. 
Some day there will be a day of reckoning.

[Jeftovic]:  I'm not up to speed on how much of RFly's
problems were caused by this specifically (a cashflow
shortage from pay-as-you-go), as I understood it (from
having both sides of the company calling me within
minutes of their domain landing on our nameservers and
badmouthing the other), the mismanagement went far
deeper than that issue alone.

As an aside, I am curious what will be revealed to be
RFly's undoing in the end because I think right now
there is a a kind of cavalier under-appreciation for
the gravity of this situation and how badly this will
play out for the rest of us registrars in the future
(there *will* be calls for things like government
intervention, more regulation, the elimination of
registrars, etc)

We've never been thrilled about this practice
(pay-as-you-go) because we've been shafted pretty
badly by it. In one case a registrant paid 3 years at
another registrar, who remitted to the registry for 1.
Customer then transferred over to us and started
calling *us* demanding to know "where my other two
years are".

He ended up being a freelancer for the largest English
language computing magazine in India and wrote one
hell of a hatchet job about our practice of "stealing
years from our registrants". Luckily, the magazine's
editor was also a customer and didn't run it (since it
was completely untrue).

That, and episodes like it left a bad taste in our
mouth and we ended up automating a mailout to users
when they transferred over to us from registrars who
were known to do this instructing them to check their
years and if any are missing, to go after the OLD
registrar for their refunds.

The practical result of pay-as-you-go is that you come
out ahead by frontloading your marketing process (in
itself, not a big deal) but gets twisted because a
registrar who provides bad service to the point where
a customer leaves actually comes out ahead if they do
so without pushing for a refund. They save the
registry fee on the subsequent unused years.






       
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