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In recent discussions within the ICANN community concerning expired domain registrations, statements have been made indicated that registrars are not currently subject to any contractual requirements relating to the handling of expiring domain registrations. These statements often cite a provision (Section 3.7.9) of ICANN's Registrar Accreditation Agreement (RAA) stating that registrars "shall abide by any ICANN adopted specifications or policies prohibiting or restricting warehousing of or speculation in domain names by registrars", but then go on to note that no specification or policy has been adopted under this provision.
Contrary to these statements, there are several requirements that registrars must observe in handling expiring domain registrations. Although no specification or policy has been adopted under Section 3.7.9 of the RAA, several other provisions of registrars' agreements with ICANN place limitations on how registrars handle expiring registrations.
The purpose of this advisory is to assist registrars in understanding their obligations under the Registrar Accreditation Agreement in matters related to expiring registrations. After summarizing the applicable contractual provisions, this advisory describes two recent programs involving expiring domain names that illustate the operation of these provisions.
Pertinent Provisions of the Registrar Accreditation Agreement
3.7.3 Registrar shall not represent to any actual or potential Registered Name Holder that Registrar enjoys access to a registry for which Registrar is Accredited that is superior to that of any other registrar Accredited for that registry.
3.7.5 Registrar shall register Registered Names to Registered Name Holders only for fixed periods. At the conclusion of the registration period, failure by or on behalf of the Registered Name Holder to pay a renewal fee within the time specified in a second notice or reminder shall, in the absence of extenuating circumstances, result in cancellation of the registration. In the event that ICANN adopts a specification or policy concerning procedures for handling expiration of registrations, Registrar shall abide by that specification or policy.
3.7.7 Registrar shall require all Registered Name Holders to enter into an electronic or paper registration agreement with Registrar ...
Two separate programs launched by different registrars or their affiliates in recent months have raised issues under these provisions of the RAA: an "auction" of expired names promoted by Afternic.com, and a sale of expired names promoted by SnapNames.com.
Afternic.com Expired Domain Auction
On 19 October 2001, Afternic (a subsidiary of ICANN-accredited registrar Register.com) announced in a mass e-mail to its customers that it was going to begin "Auctioning Expired Names." In the e-mail, Afternic reported the implementation of a "test bed," which it explained as follows: "When a registrar's names expire, they become Afternic auctions. During the auction, members can claim any names they find valuable. Those unclaimed at the end of the auction are returned to the pool of available names. The first registrar participating in the test bed will be Register.com. We hope to add more registrars in the coming weeks."
Visitors to afternic.com were invited to place binding "back-order" reservations on expired domain names that Afternic's "registrar partners" had "agreed to release through Afternic.com." Afternic further explained that "When a back-ordered name is not renewed by the original registrant after a reasonable amount of time, the back-order holder's credit card is charged the posted price plus the applicable DNEscrow fee. The back-order holder then becomes the new registrant and a customer of the registrar partner with whom the name was originally registered."
ICANN was concerned that these descriptions of the program made it appear that the registrar contemplated taking possession to the rights to expired domain registrations and offering the names for auction, with the proceeds going to the registrar. In ICANN's view, such a program would be in coflict with a registrar's obligations under the RAA, including the provisions outlined above. After discussions with ICANN, Register.com agreed that it would issue statements clarifying some aspects of the "auction" program. In a posting to the Registrars Constituency list on 22 October 2001, Register.com stated as follows:
[registrars] Afternic back-order auction
To: "Registrars-ICANN" <firstname.lastname@example.org>
Subject: [registrars] Afternic back-order auction
From: "Elana Broitman" <email@example.com>
Date: Mon, 22 Oct 2001 14:05:57 -0400
In response to some questions that have arisen, Register.com would like to clarify its intentions related to the Afternic testbed of back-order auctions. In this program, Register.com would not renew expiring names under Register.com’s (or an affiliated party's) name (unless such name were used for its or such party's business or personal use), but would follow the same procedures and schedules (such as for cancellations, grace periods, charge backs, etc.) as Register.com has ordinarily followed for registrations for which renewal fees have not been paid. If the registrant did not renew and/or transfer the name to a bidder in a timely manner, then pursuant to Register.com’s regular practice, the name would be returned to the registry. Register.com would not represent to any customer or prospective customer that it has access to the registry that is superior to that of any other registrar with respect to a domain name listed in the back-order auction testbed.
Also, Afternic.com issued a statement on its website, as follows:
Statement on Back-Order Auctions
Afternic’s back-order auctions will operate in the same manner as other Afternic auctions. Bidders’ interest in back-order auctions will be communicated to the current registrants, who may choose to accept or reject the offers. If a registrant rejects a bid and does not renew the name, then such name will be treated in accordance with registrars’ ordinary procedures for registrations for which renewal fees have not been paid.
Afternic is committed to an open and competitive registration market. Back-order auctions will provide fair and equal access to all participating registrars.
Afternic will allow back-order auction winners to transfer the registration to the registrar of their choice, in accordance with registrars’ transfer policies. For example, as with all registrar transfers, back-order auction winners will be responsible for the payment of registration fees for an additional year or years, based on the chosen registrar’s domain name fees.
Essentially, the program (as clarified) is a service that communicates to registrants offers to purchase the rights to domain registrations that have expired but are still in a grace period. If the registrant does not accept the offer, renew the registration and transfer the name to the bidder, then the registrar cancels the registration -- making the name again available for anybody to register through any registrar on a first-come/first-served basis.
Based on Register.com's constructive response to ICANN's concerns, and the representations in their public clarifications, ICANN believes that Register.com can offer such a program to its customers (with their consent) within the requirements of the Registrar Accreditation Agreement.
SnapNames Expired Domain Sale
On 7 December 2001, SnapNames (which is not an ICANN-accredited registrar, but partners with registrars to offer expired domain registration services) sent a mass e-mail to its customers announcing the availability of "over 1 million" domain names that were soon to be deleted and were being made available on a preferred basis directly to SnapNames customers. Customers were invited to download a list of the names included in the special offer at www.snaplistings.com. An excerpt from the e-mail follows:
Dear SnapNames Customer:
Over the next few weeks, an unusually large number of domain names will become available for new registration. One of the largest sources of these names is NameZero, a domain name service provider that will alone release over 1 million names.
At least 800,000 of these names are flagged for deletion on December 15, with the remainder becoming available over the following weeks. In a one-time opportunity for SnapNames™ customers only, SnapNames has arranged with NameZero to offer fixed-price SnapBack™ positions on these names, with the difference that SnapBack orders on these names are virtually guaranteed--a 99% chance--to successfully get you the names you want. (Because of modest latency in database synchronization, there's a very slight chance--about 1%--that a name you back-order may already have been deleted or transferred to someone else receiving this e-mail.)
Please act quickly. This is offer will be available only through 1:30 p.m. Eastern Time (6:30 p.m. GMT) on December 14. These names are not listed for sale on any aftermarket sites but NameZero may sell some of these names itself at higher prices, so don't delay in placing your pre-emptive SnapBack subscription if you are interested in any of these names. SnapBack subscriptions, as always, are available on a first-come, first-served basis.
Because of the considerable size of this "Million Name List", we've set up a special page where you can download and scan it for names you'd like to reserve. To download, click on www.snaplistings.com
Though SnapNames' success rate is normally very high, we can never fully guarantee that we will be able to capture a newly available name. However, because additional benefits will be included and names from the list are 99% guaranteed to be captured, processing and pricing for names secured from this inventory will be different from our usual SnapBack subscriptions:
Normal SnapBack · Success rate for securing deleting names: 70%+ · Registration period included: 1 year · Price: $49 · Registrar: Choice of registrar
Million Name List · Success rate for securing deleting names: 99% · Registration period included: Between 17 and 22 months, typically · Price: $49, plus $25 processing fee · Registrar: NameZero / VeriSign Registrar* · In addition, all purchased names will be hosted by NameZero and include their popular standard service features like e-mail forwarding, unlimited e-mail addresses and domain forwarding.
Under normal circumstances, customers of SnapNames' back-ordering/wait-listing service are not assured of successfully registering a domain name that has expired and is being deleted since it is possible that the domain will be first registered by someone else through some other competing registrar. Under the special terms announced in the SnapListings offer however, customers were promised that "orders on these names are virtually guaranteed--a 99% chance--to successfully get you the names you want."
Although the announcement did not detail the exact method that SnapNames intended to employ to secure the names for its customers, it was apparent that such results could only be achieved by means of a direct change of registrant processed through the registrar, instead of by canceling the registrations and allowing them to proceed through the normal registry deletion process.
The domains in question were reported in the offer to have been registered to NameZero. NameZero is an ICANN-accredited registrar, but it is not currently operational with the .com/.net/.org registry. The domains were registered to NameZero through Network Solutions Registrar (also known as VeriSign Registrar). Many of the names included in the offer had already expired and were beyond any applicable grace period.
Based on the descriptions of the program in the e-mail and at SnapListings.com, ICANN was concerned that SnapNames' ability to make such an offer was dependent on the cooperation of NSI Registrar, which under the circumstances could only be offered in violation of subsection 3.7.5 of the Registrar Accreditation Agreement. In other words, the SnapListings offer created the impression that instead of being deleted following non-payment of a renewal fee after expiration, that the registrar was instead complicit in a plan to directly re-sell the rights to the names to third-party buyers.
ICANN raised these concerns with NSI Registrar, and was assured by the registrar that it was not a knowing participant in any such program. NSI Registrar acknowledged that it would continue in its policy of (eventually) deleting any registration for which the registrant had not paid a renewal fee. NSI Registrar has committed to reducing its backlog of registrations that have expired, but not yet been deleted. NSI Registrar has not, and will not, take possession of the rights to expired domain registrations, either to use, sell or auction.
Upon becoming aware of ICANN's concerns, SnapNames voluntarily did further investigation into the circumstances of the registrations included in the offer, contacted ICANN, and reported that they had decided not to conduct any transactions involving the transfer of rights to registrations that had expired. SnapNames has since removed the entire offer and list of names from www.snaplistings.com.
It should be noted that SnapNames is not a party to any contract with ICANN, and is therefore not directly required to follow ICANN agreements or consensus policies. In light of this fact, ICANN commends SnapNames for their constructive and cooperative response.
This advisory is being published to both inform the Internet community about these two specific incidents, and also to promote understanding about registrars' obligations under the Registrar Accreditation Agreement with respect to expired domain registrations. In summary, the RAA imposes the following obligations on registrars:
- Registrars are required to have a contract with a registrant for every domain name they sponsor in the registry (3.7.7);
- Registrars are required to cancel the registration of any domain name for which the registrant fails to pay a renewal fee at the conclusion of a fixed registration period (3.7.5); and,
- Registrars are not allowed to represent to any current or potential customer that they have superior access to the registry with respect to the registration of any name -- whether it is un-registered, registered, or registered and expired (3.7.3).
Interested members of the community should also be aware that ICANN's Registrar Accreditation Agreement specifically provides that two issues that are subject to the establishment of consensus policies binding on all registrars are: "procedures for handling expiration of registrations" (subsection 3.7.5) and "prohibitions on warehousing of or speculation in domain names by registries or registrars" (subsection 4.2.5.) ICANN's bottom-up, consensus-based policy making system has not yet produced policies on these subjects despite these "placeholders" in the accreditation agreement. Anyone interested in contributing to the development of such policies is invited to participate; please visit <http://www.icann.org/en/participate/> to learn how to get involved.
ICANN would also like to take this opportunity to remind domain registrants of the importance of monitoring the expiration date of registrations in order to prevent unintentionally losing the rights to names that are in use. Registrants who fail to pay a renewal fee at the conclusion of their registration period face having "their" name registered by some third party. Retrieving the rights to a name under such circumstances can be difficult, expensive, and sometimes impossible.