The Internet Commerce Association sent this letter to ICANN yesterday in regard to the RegisterFly situation:

Butera & Andrews
Attorneys At Law
1301 Pennsylvania Avenue, N.W.
Suite 500
Washington, DC 20004-1701
[email protected]

February 21, 2007

Mr. Paul Twomey
President and CEO
ICANN
4676 Admiralty Way
Suite 330
Marina del Ray, California 90292

Dear. Mr. Twomey:

I am writing to you in my capacity as Counsel to the Internet Commerce Association (ICA), a non-profit trade association dedicated to promoting and protecting the rights of domain name (DN) owners. ICA’s membership is composed of individuals and companies that own, buy, sell, resell, host and manage Internet traffic emanating from search engines, domain names and Internet links.

It has come to our attention that an ICANN-accredited registrar is in the midst of what appears to be a near-complete operational breakdown, and that its ongoing failure to carry out its responsibilities is causing substantial economic loss to tens of thousands of DN registrants in both the United States and multiple foreign jurisdictions.

According to press reports, RegisterFly.com of Boonton, New Jersey - which claims to control approximately two million DNs on behalf of nearly one million registrants domiciled in the U.S. and 120 other nations—has had very serious operational problems for the past several weeks. As an apparent result of these problems, DN registrants who have utilized its services have reportedly:

• Been unable to recover DNs that were not automatically renewed per their customer agreement.

• Have lost DNs they had paid for when those DNs were allowed to lapse well before their expiration date.

• Have had their DNs “hijacked” and sold to third parties.

• Have been charged multiple times for the same registration service, even when that service is not subsequently performed.

• Have had great difficulty in contacting RegisterFly’s customer service and, on those rare occasions when able to do so, have been told that no meaningful assistance can be provided.

The loss of one’s domain names through the misfeasance or malfeasance of an ICANN-accredited registrar can have devastating consequences for a registrant. Losing a single DN can destroy a small business that has created a thriving website. The impact is multiplied many times for professional owners of DN portfolios; one press report describes an individual who has been billed $13,000 for DN renewals by RegisterFly only to face the complete loss of a portfolio of 476 DNs supporting his business and family.

Our concerns are further exacerbated by press reports that civil litigation filed on February 12, 2007 by RegisterFly and its parent company against a former top executive of the firm allege numerous instances of misuse of corporate funds by that individual which have drained the company’s bank accounts, including expenditures on a lavish Miami Beach penthouse, sex escorts, and plastic surgery. It is alleged that as a result of such financial misdealing RegisterFly was unable to pay for DN renewals it was contractually obligated to perform. That lawsuit also alleges that a company affiliated with and acting on RegisterFly’s behalf has “lost 75,000 domain names for its customers since January 2007 because customer domain names were not reserved as requested.”

We hope ICANN agrees that this is an extremely serious situation and that failure to expeditiously resolve it in a manner that protects the interests of RegisterFly’s customers will cast a serious pall over the credibility of ICANN’s registrar accreditation program.

For some time members of the professional DN community have been aware of reports of serious problems in RegisterFly’s operations. Even if ICANN was not privy to those reports, it is clear that ICANN is well aware of the present situation. One publication reports being told by Paul Levins, ICANN’s Vice President of Corporate Affairs, that ICANN has been privately discussing the situation with RegisterFly for some time, yet ICANN has not made any official statement regarding this deteriorating situation. While press reports indicate that two senior executives of RegisterFly met with senior ICANN staff yesterday, and that there were indications that ICANN would take “decisive action” today, as of 6 PM Eastern time today no report on the meeting or of any follow-up action has been posted on the ICANN.Org website.

Such silence in the midst of an unfolding debacle does not appear consistent with the commitment made by ICANN to the U.S. Department of Commerce to improve the transparency and accountability of its operations. ICANN’s silence also allows RegisterFly to continue to take DN registration orders and victimize new customers who remain unaware of the company’s meltdown, as RegisterFly.com remains open for business with the “ICANN Accredited” logo prominently displayed on the bottom of each web page. Alarmingly, and misleadingly, its Company Information page claims that RegisterFly is a “global industry leader” that offers “excellent customer service” and “value for our customers”.

Victimized customers who have turned to ICANN’s ombudsman for help have received little, despite growing requests for information and relief. The February 12th entry of your Ombudsman, Frank Fowlie, states, “In the past couple of weeks, over 70% of the non-jurisdictional contacts my Office has received have concerned registerfly.” However, Mr. Fowlie has provided no meaningful assistance to the registrants who have been victimized by RegisterFly’s dysfunctional condition, saying little beyond that he has referred the matter to another ICANN employee - Mike Zupke, Registrar Liaison Manager—who will pass the concern on to his RegisterFly contact. He then goes on to state, “If, however, Mr. Zupke determined that the matter you are complaining about is unrelated to the Registrar’s Accreditation Agreement, or any other ICANN policy, he will likely encourage you to work out the situation with the registrar.” This advice is of no assistance to the victims who have contacted ICANN because they were unable to receive any meaningful resolution from RegisterFly. It is also difficult to believe that RegisterFly’s current operations can be in compliance with its Accreditation Agreement, yet we are aware of no corrective action being taken by ICANN. A February 20th update posted by Mr. Fowlie in response to a critical news report clarifies that his jurisdiction extends only to inquiring into the “fairness” of ICANN actions and not to providing consumer assistance. He further reports that Mr. Zupke has “followed up on each complaint I have referred to him, and these have all been identified to senior management at registerfly.” But this is the same senior management that is in the midst of a civil litigation war and that has failed to provide customer relief to this point. Finally, Mr. Fowlie volunteers that his Office has performed a “trend analysis” of the complaints, which statistics will be transmitted to ICANN’s compliance manager and to RegisterFly “for appropriate follow up”. None of these actions have helped a single victim of RegisterFly.

In light of this very serious ongoing situation we would appreciate ICANN’s response to the following questions made on behalf of our members and other DN owners:

• Has ICANN determined whether the situation at RegisterFly is a violation of its Accreditation Agreement or any other ICANN policy? If so, what steps is ICANN taking to resolve the matter, including revocation or suspension of that Agreement?

• What oversight procedures does ICANN have in place to monitor ongoing registrar compliance with accreditation agreements and other relevant ICANN policies?

• What assistance is ICANN able and willing to provide to the tens of thousands of DN registrants who have reportedly suffered significant economic harm as a result of the RegisterFly situation?

• Most importantly, does ICANN believe that it has handled this situation properly and clearly communicated the facts of the situation and its response to the affected DN owner community? And, if not, what lessons has ICANN learned from this crisis and what changes in its accreditation granting and enforcement, consumer assistance, and communications policies will be made going forward to assure that the rights and economic interests of DN owners are never again jeopardized in this manner?

The ICA stands ready to work with you and the entire ICANN staff toward a lasting resolution of the serious problems that have been revealed as this matter has unfolded. Thank you in advance for your response to our inquiry.

Sincerely,
Philip S. Corwin
Partner
Counsel, Internet Commerce Association