Domain Kiting 101

"Domain Kiting", a new buzzword, has created wrinkles on forehead of many, in domain industry. A term coined by Bob Parsons, of GoDaddy fame, it refers to unfair practice of cancellation of domain registrations before expiry of five-day grace period, to receive full refund of the fee, followed by re-registration of the domain names, only to repeat the cycle again.

Kiting is a scam involving few Registrars who are able to deposit large amount of cash with Registry and then purchase plenty of domains, usually well-indexed, expired domains. Temporary web site loaded with paid advertisement links is then hosted at these domains, which receive traffic, courtesy search engines. Clicks by visitors to such sites, generates revenue for these registrars. These domains get dropped before expiry of five-day grace period to obtain full refund, only to get re-registered if potential is there. In nutshell, registration fee is never paid for, as there is cancellation before expiry of grace period, though profits are earned on these domains from traffic received during the grace period. It should be remembered that domains getting trapped in such scheme are put off the market and remain unavailable to general public, unless they break out of this vicious cycle . Growing threats of security and likelihood of criminals exploiting such a loophole for illegal gains, adds more weightage to the problem.

A simple solution to the problem is making the registration fee non-refundable. Additionally, legislation can be passed as a deterrent. Furthermore, ICANN could impose limits on number of domain name cancellations permissible against numbers registered. ICANN can also look into statistical add/drop records of registrars and initiate inquiry. There can be any number of solutions, but is ICANN willing to act?
Despite, efforts by many leading personalities, including Bob Parsons, the issue remain unresolved. ICANN, the board responsible for fixing this loophole, refuses to address it, unless a Registry approaches them through proper channel and Registries like VeriSign (controlling .com registry) remain tight-lipped over this contentious issue. Thus, the deafening silence over this issue is only making things worse for the general public and genuine customers who may not be able to use domains that relate to their business or may have to pay escalated price to procure one from kiting registrars. A recently filed lawsuit against Dotster is expected to touch upon this issue in court of law and we can be optimistic about a judgement that shall be a warning to those who are involved in this scam.