FTC forces spammer to refund domain fees

October 21st, 2002
By Demys News Service

FTC forces spammer to refund domain fees

The United States' Federal Trade Commission has forced a British entrepreneur who sold domain names that did not work to repay his proceeds to his victims.

As reported by Demys news (see: OFT domain action "too little too late" - 30th August, 2002) domain name retailer Thomas Goolnick was found to have used an aggressive unsolicited commercial mailing campaign to sell $59 alternative generic top level domains such as .usa, .brit, and .scot. However, the domains were not approved by Internet authority ICANN (Internet Corporation of Assigned Names and Numbers) and would not work unless users downloaded special software to access them. This did not stop Goolnick selling 6,000 of his domains, netting him an estimated $350,000.

Such alternative domain systems are not new and certainly not illegitimate. Perhaps-the best known is run by California-based New.net who sell a number of alternative top level domains such as .shop. As with Goolnick's system New.net's domains either require users to download software or to use a particular Internet Service Provider (ISP) in partnership with New.net. Crucially, however, New.net make potential purchasers aware of these issues before selling the domains - while Goolick claimed that the domains would work for any Internet user.

The fact that the FTC have now forced Goolnick to refund his customers shows that the USA is way ahead of Britain when it comes to closing down deceptive domain scams and protecting consumers. The UK investigation conspicuously failed to take any action over Goolnick's activities beyond seeking an undertaking against the continuation of the campaign.

Demys advise that users should always use a domain reseller that has been approved by the relevant domain name authority such as ICANN or Nominet, or to consult a domain name specialist before buying domains.