U.S. authorities take aim at Canuck registrar

An Ontario domain-name registration company is back in the news after U.S. authorities accused the firm of using questionable marketing tactics.

Late last year the U.S. Federal Trade Commission (FTC) filed a final judgment in court enjoining Markham, Ont.-based Domain Registry of America Inc. (DROA) to change the way it catches customers.

The judgment is “stipulated,” meaning DROA would agree to a settlement, said Stephen Cohen, an attorney in the FTC’s Bureau of Consumer Protection in Washington, D.C. But the judgment, filed in a New York court in December, also says DROA admits no “liability or any wrongdoing for the allegations.”

DROA is accused of using deceptive practices to lure clients. An FTC court complaint says the company, which resells domain registrations for another firm called eNom Inc., mailed what looked like domain name renewal notices to U.S. citizens. These messages told recipients to pay up or risk “loss of your online identity.”

The FTC says it was a ruse. “In many cases, consumers do not realize that by returning the invoices along with payment to ‘renew’ their domain name registrations they are, in fact, transferring their domain name registrations from their then-current registrars to eNom,” the FTC said in a court statement.

The organization also said DROA charged hidden administration fees, and took its sweet time with refunds — a violation of the U.S. Truth In Lending Act, which requires payback within seven business days.

The judgment, which has yet to receive the court’s stamp of approval, lays out restitution measures. DROA must do the following: stop charging hidden fees, such as the US$4.50 for incomplete transfers; pay out refunds in a timely manner; refund cancellation or administration fees to wronged customers; e-mail clients and let them know about the FTC settlement; post a notice/claim form on its Web site so clients can switch to another registrar easily; pay US$6 to help ease the customer’s cost of switching registrars; and maintain accounting, personnel and customer records for FTC scrutiny.

The FTC says DROA might have to pay up to 50,000 people as a result of its allegedly sneaky modus operandi.

Daniel Klemann, listed as DROA’s president in the judgment, could not be reached for comment. A DROA customer service rep said she did not recognize Klemann’s name. DROA’s attorney, Charles Rosenzweig of Rand Rosenzweig Smith Radley Gordon & Burstein LLP in New York City, could not be reached for comment. Neither could an eNom spokesperson.

This is not the first time that DROA has been accused of underhanded practices. In 2002, Register.com Inc., a New York-based registrar, complained that the Ontario company was “slamming” Register.com customers — sending out false renewal notices to trick clients into joining the eNom fold. Register.com won a preliminary injunction against DROA.

According to Tim Kutt, president of Kitchener, Ont. ISP and registrar Golden Triangle On Line Inc., a firm named Domain Registry of Canada (DROC) — which happens to share DROA’s telephone number — has been sending false renewal notices to his clients. “We just dealt with a client today.”

Kutt said Golden has 8,000 corporate customers — the easiest pickings for slammers.

“You send a bill to an accounting department…they’ll pay it. It happens a lot.”

Kutt wasn’t particularly impressed by the FTC’s procedures against DROA. “They’ve been hit before,” he said of the firm. “There’s always going to be someone like that in the business.”

Nonetheless, Canada’s Competition Bureau is well aware of slammers. The organization instigated legal proceedings against one firm, Internet Registry of Canada. This registrar sent out fake renewal notices that looked like they came from the government.

“There was a preliminary hearing in December, but the decision of the judge hasn’t been made yet,” said Andrew McAlpine, a senior competition law officer in Gatineau, Que. “Hopefully it will in the next few weeks, whether that goes to trial or not.”

McAlpine said he’s not allowed to tell us if the Competition Bureau received complaints about DROC. However, he mentioned that one of the people charged in connection with Internet Registry of Canada is named Daniel Klemann. Recall that “Daniel Klemann” is also the name listed as president of DROA in the FTC judgment.

“Whether they’re the same person, I can’t say,” McAlpine said. “But the names seem to be…similar. The things they were doing seem to be similar. You can draw whatever conclusions you want.”

According to a 2002 Globe and Mail article, DROC launched a defamation suit against Tucows Inc., a registrar, insisting that there is no connection between DROC and Internet Registry of Canada.

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