[registrars] Network Solutions Settles FTC Charges

["Bruce Tonkin" <Bruce.Tonkin@xxxxxxxxxxxxxxxxxx>]

From: http://www.ftc.gov/opa/2003/09/networksolutions.htm


Network Solutions Settles FTC Charges

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.