Alarm bells ringing over domain registrar, RegisterFly.com

Beijing News.Net
Monday 19th February, 2007

(Big News Network.com): Up to two million domain names, including many with associated Web sites, are at risk over the apparent failure of ICANN-accredited domain registrar, RegisterFly.com.

The company in recent weeks is reportedly almost dysfunctional as customers scramble to register, renew or transfer names. RegisterFly.com's support systems appear to be down, or completely overwhelmed.

It appears all domain names with the registrar are locked, preventing clients transferring, or even updating them. Attempts to change the status of domains are being overridden by the registrar.

Registrars are required to provide owners with authorization codes which are required in transferring to other registrars. These are normally displayed in clients' accounts, which are accessed by private login and password codes. It appears however RegisterFly.com has stopped displaying the codes.

Calls to the various telephone numbers nominated for sales, technical support, and billing enquiries are going unanswered. Emails are not being responded to, and the registrar's online support system appears to be unmanned or so under-resourced it is giving that impression. The company has recently introduced a new fax support system. However faxes are going unanswered as well.

Customers attempting to renew domains are receiving emails saying their renewals have failed, without any other information or explanation. In some cases attempts to subscribe to other services are unsuccessful with online messages indicating there is a problem with their credit card, or payment is denied. On checking with their credit card provider they are sometimes finding charges have in fact gone through.

RegisterFly.com uses a security certificate to encrypt data during transmission. Pop-up prompts now appearing on its site however are notifying site users that the security certificate, which had 12 months duration, expired on Saturday.

A major concern for domain owners is that not only are their names at risk, but in many cases those domains involve Web sites.

A site www.registerflies.com has been established for disgruntled RegisterFly.com customers to air their grievances. Curiously www.registerflysucks.com is actually registered to, and hosted by, RegisterFly.com itself as a "landing page" or "parked" site. Unfortunately for the embattled company the site features a review of RegisterFly.com which is far from favorable. Reviewer Jim Darson says, "It seems from the comments/emails I have received, that you should definitely stay away from this company. How they have managed to continue operating with all the negative feedback I've received is beyond me."

One poster, Anon, added, "My account is restricted, my domains are locked, I can't transfer to another registrar."

Adventurepack commented, "These guys are horrible. Besides quadruple charging my credit card without authorization and trying for weeks to get hold of them by email and phone (one time I called on their toll free line at 2 pm central time and was on hold till I came back the next day at 9 am central time). They tried to use a service called stormpay. What a joke. They try to charge you a $12 fee for returning your money that they wrongfully charged you for in the first place."

Lee S. said, "They have taken at least three of my names and sold them to other parties. I have always paid my renewals on time, but that doesn't matter. One of the names they hijacked isn't up for renewal for three weeks. And, of course, they are still billing me as if nothing is happening."

On digg, poster publicXcuse says, "Over the last three or four weeks I've tried renewing one of my domains about 10-12 times now and I get a failure every time. Registerfly keeps saying sorry and to try again. It keeps failing it doesn't look like it's going to end anytime soon."

The problem with RegisterFly.com highlights the vulnerability of domain name owners generally who entrust the world's approved registrars to act as custodians to what is becoming extremely valuable property.

The value of domain names has shot higher in recent years, particularly with the proliferation of parked Web sites. Here domain registrars, including the majors, are using their customers domain names to establish advertising vehicles for which they derive advertising revenue. Often the domains are used without the authorization, or even the knowledge, of owners. Some however offer customers participation, but usually at a fee. If customers don't take up the option, then the registrar often just uses the domain anyway, pocketing the revenue itself.

The business is so big, one of the majors monetizing domain names, Demand Media, Inc., has acquired two of the largest wholesale registrars, Bulk Register.com and Enom.com. Enom.com had ties with RegisterFly.com, which was one of its resellers for several years (since 2000) until the arrangement was terminated in February last year.

Founded in April 2006, Demand Media is a next-generation Web media company which has put together more than 150,000 domain names and turned them into niche content Web sites.

A dilemma for domain name owners is that registrars are becoming increasingly involved in the use and monetization of domain names themselves, raising suspicions when owners are not advised of pending expiries of their domains, and in the case of RegisterFly.com where they are unable to renew or transfer them. It is unlikely registrars would deliberately engage in practices to pirate domains they are guardians of, but there are many disgruntled former domain owners who blame their registrars for their losses.

RegisterFly.com is involved in providing what are called, "landing pages," whereby either text ads relevant to the domain name feature, or unique content is established on the domain page or pages, surrounded by advertising banners or links. The advertising revenue generated in this case goes to RegisterFly.com and owners are not given the opportunity to share in it.

At least for the past week the monetized sites appeared to be down with the message: "We're sorry, but something went wrong. We've been notified about this issue and we'll take a look at it shortly." Some domains are now back displaying text ads again, while others don't propagate. Meantime a number of domains registered with RegisterFly.com are now pointing to EventRobot pages related to a company that claims to "transform your site or message board into an interactive social networking experience, converting your audience into a passionate community."

Problems with RegisterFly.com, which claims to have two million domains under its control through one million customers in all fifty U.S. states and 120 countries, appear to have surfaced long before its accreditation with ICANN and appear to have played a major part in the severing of ties with Enom. As of Monday RegisterFly.com was still listed as an ICANN accredited registrar. The ICANN Web site in describing RegisterFly.com says its, "various products and services is backed by 24/7 World class customer service via phone, live chat and email."

RegisterFly.com, which according to ICANN has its offices at 4th Floor, 404 Main Street, Boonton, NJ, also offers hosting services and claims to be presently serving more than 300,000 Web sites. The company claims to be debt-free so it is unclear whether it is undergoing a financial collapse or its technical resources have been exhausted. However the longevity of its problems suggest a structural deficiency. Online blogs point to a partnership dispute between the RegisterFly.com principals, Kevin Medina and John Naruszewicz. Registerflies.com in fact is providing online access to what it says is a copy of a civil action claim launched last Monday (February 12 2007), by RegisterFly.com, its parent Unifiednames, inc., and Naruszewicz, against Medina.

The court document, which has not been independently verified, outlines that Naruszewicz and Medina are partners in Unifiednames, with each holding 50% of the company's shares. It claims Medina, Monday last, was removed as President and CEO of Unified, which incorporates RegisterFly.com as a subsidiary.

The document says Unifiednames had 200,000 domain names reserved for its customers as at December 2006. It is not known whether this forms any part, or all, of the RegisterFly.com inventory.

More alarmingly the document claims Unifiednames, "has lost 75,000 domain names for its customers since January 2007 because customer domain names were not reserved as requested due to Unifiednames failure to remit the registry fees."

The court document claims Medina drained the company's bank accounts. It alleges expenditure on an escort of $9,000, payment of Medina's $10,000 a month rent on a penthouse at Miami Beach, Florida, and "tens of thousands of dollars" on personal credit card charges, and personal cash payments, including $6,000 for liposuction.

The civil action is seeking an order for Medina to sell his shares, alleging he is refusing to do so. The order sought also seeks Medina's removal as a director, compensatory damages, punitive damages, attorneys fees, and court costs.

The claims made by the plaintiffs will have to be proven unless a settlement is reached with Medina. The court document too only represents one side of the story.

Whatever the full extent of the issues at the registrar, something has gone badly awry and is at complete odds with the company's mission statements posted on its Web site as late as Monday:

"By adhering to our basic principals of low cost and value to our customers and excellent customer service we have grown to be one of the largest low cost registrars on the Web today. In terms of number of customers and domains registered we are one of the 10th largest registrars in the world. We are not a 'one man' shop (like many domain registrars and resellers) or a 'here today gone tomorrow' business, we have invested substantially in positioning Registerfly.com as a global industry leader."

RegisterFly.com says, "We do not believe in spending millions of dollars on ineffective advertising or being lavish. We have built a profitable, thriving business and owe it all to our customers. Our approach is to keep our eye on the bottom line while continuing to develop and offer new products and services to our customers, in other words, value for our customers."

"Sure there are other registrars out there cheaper," says RegisterFly.com. "Some actually are willing to make pennies over cost or worst yet lose money on each domain sold just for the sake of market share, NOT RegisterFly. We are in this business for the long haul," the registrar's Web site states.

ICANN, through its press office, was made aware of the pending publication of this story well prior to the commencement of business on Friday. ICANN was alerted to the claims being made about RegisterFly.com and was asked whether it was prepared to issue a statement concerning the status of the registrar. ICANN was also asked what mechanisms were in place to protect domain owners generally in the event of a default by an ICANN-accredited registrar. ICANN did not respond.

Telephone calls to RegisterFly.com to seek clarification of the company's status went unanswered. An email was sent prior to the commencement of business on Friday care of Support, Customer Care, Sales, and Compliance, at RegisterFly.com, utilizing RegisterFly.com nominated email addresses. An offer was made to include in this story a statement on behalf of the company responding to the issues being raised, and to clarify the company's status. As of Monday morning, and up until this point, no response has been received from the company.

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