VeriSign Marketing Methods Curbed

In a settlement with U.S. regulators, VeriSign has agreed to abstain from past marketing practices that allegedly tricked consumers into transferring domain names to its Network Solutions business.

The deal stems from a year-old incident involving soliciting domain name holders to renew their registration in what competitors charge was a misleading manner. VeriSign controls the main database of .com and .net domain names. But the settlement comes on the heels of new complaints from rival registrars and even the Internet overseer Internet Corporation for Assigned Names and Numbers over more recent VeriSign promotions.

Solicitation Cited

VeriSign reached a deal in the earlier incident with the Federal Trade Commission. The FTC will monitor its compliance with this settlement, according to court documents filed Wednesday. The domain name registrar is also agreeing to give refunds or free service to customers who responded to an allegedly deceptive marketing mailing from Network Solutions.

In a mailing last year to customers of competing domain name registrars, VeriSign's Network Solutions warned that their domain name was about to expire and offered to renew it for a fee. The mailing did not state when the name would expire, which in some cases was months or years off. Also, renewal actually meant transfer of the domain to Network Solutions, making the notices deceptive, the FTC charges.

VeriSign acknowledged the FTC's investigation of its marketing practices in August 2002. As part of the settlement, the company is not admitting violating any laws, the FTC says in a statement.

The settlement with the FTC follows a class action settlement in January this year in which VeriSign agreed to refund customers who had responded to the mailing and had second thoughts, or give the customer a year of free domain registration if they in fact wanted to renew their domain.

New Complaints

Just last week, some domain registration companies began complaining about what they consider a new VeriSign marketing tactic.

The company routes any entry of a non-existent Web address, including typos, to its new Site Finder service. Because VeriSign controls the main database of .net and .com names, it was able to add a wild card to the databases, rerouting misaddressed traffic to its own service.

Site Finder provides a search engine, a list of existing domains with related spellings, and a directory of Web sites. Competitors contend it is an attempt to hijack Web traffic that would otherwise result in an error message or redirection to a search service of the surfer's preference.

Popular Enterprises of Orlando, which runs the competing Netster.com search site, has even filed a $100 million suit against VeriSign claiming unfair competition, and seeks an injunction stopping it from running Site Finder.