"RegisterFly has flown..."

Brawling RegisterFly partners in fight to the death
Malaysia Sun
Saturday 24th February, 2007

Big News Network.com: The extraordinary unraveling of embattled domain registrar RegisterFly.com has continued into the weekend.

The two principal shareholders John Naruszewicz and Kevin Medina at the weeks-end were still trading verbal blows, while ICANN stepped in to the fray after nearly three years of complaints. Whilst most focus has been on the failure of the company's support systems, allegations of fraud and corruption were flowing freely Friday, not only from the principals involved, but from ICANN.

Meantime the control of RegisterFly.com, seized by Naruszewicz on Tuesday, was back in the hands of Medina late Friday. Both parties are accusing the other of hijacking the company's Web site and administration, which has been effectively dysfunctional for weeks. Medina has also replicated the current site at www.registerfly-inc.com so if he loses control again, or the original site is brought down, he can continue to trade on.

Whilst existing customers are up in arms over the loss of control of their intellectual property, and their inability to obtain redress, RegisterFly remains open for business, offering its services to new, unsuspecting customers. Despite its registration, renewal, and transfer systems all being dysfunctional, RegisterFly continues to take payments for orders it cannot fulfill.

One large customer who was unaware of the behind-the-scenes debacle tried to acquire what is called a "Flypack" around two weeks ago. A Flypack is a coupon for multiple domains which reduces in price dependant on the volume. These "coupons" can be used to register, renew, or transfer domain names. With the system in-operative the customer's attempts to pay a few thousand dollars for several hundred domains on his credit card was unsuccessful. The customer issued a support ticket and sent an email asking for help. Late Friday Kevin Medina emailed the customer saying he had tried to put the charge of nearly $7,000 through, but was unsuccessful. "I tried to charge your card and it failed," he wrote. "I tried to charge in different amounts but it did not work," he added. He asked the customer to contact the credit card company and have them approve the amount.

While the two 50% shareholders fight for control, the company's hundreds of thousands of customers are getting angrier and angrier. In a normal situation they would be leaving the company in droves. The only problem is their domain names are locked up, and their authorization codes are being withheld preventing transfers to alternative registrars. Domain names reaching their expiry date are simply being lost. With many of these involving Web sites a large number of customers are losing complete businesses or at the very least, important business tools. Compounding the problem is that many of RegisterFly's customers are managing domains and Web sites on behalf of others.

Court documents filed last week by interests associated with Naruszewicz claim 75,000 domain names have been forfeited by RegisterFly.com in the past month alone, due to the registrar's failure to pay registration fees.

Due to the inability of the courts to move swiftly, and ICANN having only initiated a potential breach notice, it appears that without the principals entering into a form of settlement, the death of RegisterFly.com is inevitable.

Already ICANN in its breach notice has raised concerns the registrar "may be bankrupt or insolvent." Even more concerning is that a number of complaints received by ICANN relate to allegations of fraud. Another bombshell from the domain name authority in its breach notice which was made public Friday, but was issued Wednesday, is that the complaints date back to at least 2005. One of the most frequent complaints was that customers were being overcharged two, three and four times per transaction. RegisterFly customers who believe the current serial support issues at their registry are a recent phenomena will be disturbed to know that from late 2005 until early 2006 ICANN was receiving large numbers of complaints that emails and support tickets were going unanswered, and the call hold time was frequently in excess of 30 minutes.

If customers had their credit card company reverse any overcharges, ICANN says RegisterFly "retaliated by denying the customers access to all of the registered names in their account," not just the names involved in the relevant transactions.

It appears ICANN simply forwarded all the complaints received to eNom, which was the primary registrar, with RegisterFly being a reseller.

On January 17 2006 ICANN told eNom it was receiving an "unusually high number of complaints concerning RegisterFly." eNom responded with an explanation from its reseller RegisterFly, which indicated that RegisterFly intended to move its customers domain names from eNom to its own account. Incredibly a month later, at the very time ICANN was accrediting RegisterFly, eNom was contacted again and was told its own accreditation was in potential breach as a result of allegations that its reseller RegisterFly was altering customers' Whois data and populating the Whois record with "intentionally inaccurate data." eNom was told at the time that any domain registrations through its accreditation, even if processed through RegisterFly, were eNom's responsibility.

In April last year ICANN says it continued to receive complaints about RegisterFly. Customers reported being locked out of their accounts, and having domain names disappearing from their accounts. Kevin Medina, says ICANN, responded by saying the issues were as a result of "growing pains."

In May 2006 the complaints started to include reports of "stolen" registrations and renewals. On the 19th of May ICANN says it received a complaint from an owner of 220 domain names who, after a heated argument with RegisterFly, noted the Whois information for his 220 names was changed to reflect "Kevin Medina" as the registrant instead of the domains owner. It took several weeks for RegisterFly to address this issue with ICANN, culminating at a meeting between ICANN staff, Medina, and RegisterFly.com's Glenn Stansbury, where the "inordinate number of complaints ICANN had received regarding RegisterFly" was discussed. Medina and Stansbury both assured ICANN that "RegisterFly was working hard to improve its customer service."

The pair also said they were working to relieve the pressure on their employees in the Risk/Fraud department. It was in this discussion that the RegisterFly executives dropped another bombshell: employees in the Risk/Fraud department were being paid "strictly on commission." The policy was changed "as a result of RegisterFly's discussions with ICANN."

By early December 2006 ICANN says it was still receiving "ever-increasing complaints from RegisterFly customers about over-charging." At a meeting on December 3rd 2006 ICANN met with Stansbury and Mark Klein, the company's Vice President of Sales, who had only joined the company weeks earlier after 5 years at Tucows Inc., to discuss the high volume of complaints which included issues surrounding RegisterFly's failure to renew customers domain names, failure of the support systems, billing errors, insufficient funding of registry accounts, and nonpayment of ICANN invoices.

ICANN says Stansbury and Klein repeated previous assurances that the issues were being corrected, and that the registrar was opening a new customer service facility within a week. ICANN's concerns were detailed in a document handed to the RegisterFly executives at the meeting. Stansbury promised to respond in writing within one month (January 3 2007). ICANN never received a response.

In January 2007 ICANN continued to receive complaints from RegisterFly customers, but complaints by then were also coming in from other ICANN-accredited registrars, ICANN board members, and the U.S. Department of Commerce. Deeply disturbing was the fact that the most common complaint by RegisterFly customers was that transactions that were billed and paid for were not being effected at the registry. "In addition, multiple-year renewals and registrations were only being processed for one year instead of the number of years that had been paid for."

With Naruszewicz and Medina heavily engaged in a bitter dispute, their business dysfunctional but still trading, serious allegations of fraud, misrepresentation, misleading conduct, and theft, afoot; and control of the company's Web site and administration constantly changing amidst claims (by both sides) of hijackings and sabotage, it is unlikely customers can do anything other than stand on the sidelines while the drama plays out.

A slim hope may be concerted action by the domain names industry involving ICANN and some of the leading accredited-registrars. Action could include making application for a court order for authorization codes to be released to customers so transfers can take place, ICANN extending expiry dates of names under RegisterFly's control for up to a period of say six months from now (as a first step) to ensure no more names are lost, and alternative registrars dividing up and taking over blocks of domain names, and acting as interim registrars, at least until the dust settles.

John Naruszewicz, in a statement published Thursday on Registerflies.com said he had personally pledged all of his personal assets, mortgaged his home, leveraged all assets, and was securing large letters of credit to restore the company. Regardless of his motivation, and the extent of his commitment, he needs first to get control of the company's Web site, and it seems even the support emails, which were all clearly in the hands of his partner, Kevin Medina, as of late Friday night.

As for Medina, regardless of the slanging match between he and his partner and the very public, but unproved, claims raised against him in court documents, he has been the President and CEO of RegisterFly during its history of failures, and is unlikely to be part of any solution to the company's woes. His time in any event, since regaining control of RegisterFly late Friday, has been spent trying to process credit card payments from unsuspecting customers, for fictitious services.

For all intensive purposes it appears RegisterFly has flown.