RegisterFly threatened with ICANN shutdown

ICANN has given scandal-hit domain name registrar Registerfly.com 15 days to sort its problems out or risk losing its license to sell domains.

The organization, which oversees the domain name system's policies and practices, sent a letter with the ultimatum to New Jersey-based Registerfly yesterday, and published it on its own web site.

“It's a rare move for us to send a letter that indicates that we will consider terminating the agreement,” said ICANN vice president Paul Levins.

The move came after several weeks of angst from Registerfly's customers, many of which claim to have lost their domains or to have been overcharged for names that they ultimately lost anyway.

ICANN also sent a separate letter, which has not been published, demanding that Registerfly make all its data available for inspection and copying no later than 10am Friday, according to Levins.

All registrars are obliged to provide their data to ICANN escrow under the terms of their registrar accreditation agreement, Levins said. ICANN would be able to enforce these terms in court if not complied with, he said.

This, it is hoped, will give the registrants of Registerfly's roughly 900,000 domain names some confidence that their data will not be lost if something should happen to Registerfly.

There has been an internal feud at the company for some time between joint owners Kevin Medina, CEO, and John Naruszewicz, vice president, which culminated in a February 12 lawsuit.

Naruszewicz sought, and received, a preliminary court injunction preventing Medina from accessing the company's funds. Naruszewicz claimed that Medina had been using corporate money to pay for a life of luxury, at the expense of the company and its customers.

Among the allegations were claims that Medina has used Registerfly's money to pay for a $10,000-a-month Miami Beach penthouse, a $9,000 escort, and $6,000 of liposuction surgery.

ICANN's seven-page letter outlines several breaches of the registrar contract, and outlines a timeline of customer complaints reaching as far back as late 2005.

It says Registerfly failed to provide its customers with the codes they need to transfer their names to competing registrars and that it kept customers' names in a “locked” status, so they could not be moved.

It also says that ICANN received many complaints that customers were being double, triple or quadruple-billed for domain names, and that the company would deny users access to their names if they tried to chargeback their credit cards.

On one occasion a Registerfly customer complained that their domain's contact information had been altered to “Kevin Medina”, the name of Registerfly's CEO.

Medina told ICANN's registrar liaison these problems were due to “growing pains”, according to ICANN's letter. However, ICANN continued to receive an “inordinate amount of complaints” about the company throughout 2006.

ICANN also received complaints that paid-for multi-year domain registrations would only be made for one year, and that in late 2006 thousands of domains that customers paid for were not registered because Registerfly did not have a sufficient cash float with the domain registry.

“Registerfly’s pattern of neglect of its obligations to ICANN, fellow registrars, and customers demonstrated by the above circumstances is unacceptable,” the letter says. “Registerfly has repeatedly taken what appears to be a cavalier attitude toward the promises it made.”

“The inability to retain sufficient funding for Registry Accounts also raises concerns that Registerfly may be bankrupt or insolvent, which would allow ICANN to immediately terminate the RAA,” ICANN's letter says.

Registerfly now has 15 days to get its act together, or risk losing its ICANN accreditation.

While the enforcement move by ICANN may come as some comfort to Registerfly's customers, it does highlight the fact that ICANN has been aware of the company's customer service problems for the last 15 months and, save securing promises during a handful of backroom meetings, was unable to prevent them continuing.

ICANN now seems set on getting its hands on Registerfly's customer data, to protect currently registered domains should it come to the worst. However, it's less clear what this means for Registerfly's customers at this point.

Source: CBRonline.com