ICANN implements new policy to combat domain name tasting & kiting

The Internet Corporation for Assigned Names and Numbers (ICANN) recently implemented a new policy to curtail domain name tasting and kiting of generic top level domain names (gTLDs).

The policy, called the Add Grace Limits Policy, is designed to discourage domain name tasting by restricting refunds under the Add Grace Policy (AGP). The organizations operating gTLD registries (called operators) are to implement the Policy as soon as possible, and no later than March 31, 2009.

The AGP, which is available for some gTLDs, was designed so domain name registrations due to typos, other errors and fraud could be canceled within five (5) days of registration with registration fees refunded. Unfortunately, the AGP has been manipulated by domain name tasting and domain name kiting.

Domain name tasting involves registering a domain name whose registration recently lapsed or incorporating a misspelled word or trade-mark to test the domain name’s ability to generate ad revenue. If the domain name does not generate sufficient ad revenue, the domain name’s registration is canceled within the AGP.

Domain name kiting is a type of domain name tasting. In domain name kiting, domain names which generate lucrative ad revenue are repeatedly registered and canceled within the AGP period to avoid paying the domain name registration fee.

The AGP Limits Policy restricts the AGP refunds that domain name registrars (the businesses that register domain names on behalf of customers, called registrants) can get from the operators. Under the Policy:

  1. During any given month, the operator cannot offer any refund to a registrar for any domain names deleted during the AGP that exceed (i) 10% of that Registrar’s new domain name registrations in that month, or (ii) fifty (50) domain names, whichever is greater, unless an exemption has been granted by an Operator.

  2. A registrar can seek exemption from the new AGP fee refund restriction based on extraordinary circumstances. To obtain the exemption, the registrar must advise the operator as to how the extraordinary circumstances were not known, reasonably could not have been known, and were outside the registrar’s control. While the operator has the sole and reasonable discretion to grant an exemption, extraordinary circumstances which regularly reoccur for the same registrar are deemed by the Policy as not extraordinary.

  3. Each operator must report to all exemption requests to ICANN. The report must identify each Registrar seeking an exemption, the extraordinary circumstance on which the exemption application was based and whether the operator approved or denied the exemption request.

ICANN reported in November 2008 that AGP deletes declined by 84% the first month after a similar policy was implemented earlier in 2008. That policy was not as financially punitive as the AGP Limits Policy. It remains to be seen whether the AGP Limits Policy will make domain name tasting and kiting unprofitable to the point that those practices are eliminated. In any event, ICANN has adapted a “yes we can” approach to eliminating domain name tasting.

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