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FTC Warns ICANN On New Internet Domain Names

by Glen Shapiro,, New York

23 December 2011

The United States Federal Trade Commission (FSC) has written a letter to the Internet Corporation for Assigned Names and Numbers (ICANN), the organization that oversees internet domain names, expressing concern that the latter's plan to expand the domain name system could leave consumers more vulnerable to online fraud.

ICANN’s Board of Directors has approved a plan to launch a new generic top-level domain (gTLD) space, one of the biggest-ever changes to the internet’s domain name system. The plan will allow an increase in the number of gTLDs - from the current 22, which includes such familiar domains as .com, .org and .net.

ICANN intends to allow website operators to apply for new gTLDs starting on January 12, 2012. Internet address names will be able to end with almost any word in any language, offering organizations around the world the opportunity to market their brand, products, community or cause in new and innovative ways.

In its letter to ICANN, the FTC has warned that rapid expansion of the number of gTLDs could create a "dramatically increased opportunity for consumer fraud", and make it easier for scam artists to manipulate the system to avoid being detected by law enforcement authorities. It urges ICANN – before approving any new gTLD applications – to take additional steps to protect consumers, starting with a pilot programme to work out potential problems.

"A rapid, exponential expansion of gTLDs has the potential to magnify both the abuse of the domain name system and the corresponding challenges we encounter in tracking down Internet fraudsters," the FTC's letter states.

The FTC’s letter also notes that it has raised consumer protection issues with ICANN for more than a decade. It stresses that the FTC and other law enforcement agencies need to navigate the domain name system in order to investigate cases of unfair or deceptive practices online, and the existing system is already open to manipulation by scam artists seeking to avoid detection.

The FTC has explained that it routinely consults the ‘Whois’ service, which lists the identities and contact information of website operators, but that the Whois service itself often contains incomplete or inaccurate data or, increasingly, proxy registrations, which shields contact information even for domain name registrants engaged in commercial activities.

It therefore believes that the increase in website names that could be registered in the new gTLDs could put "infinite opportunities" at the fingertips of scam artists, who take advantage of consumers through tactics such as using misspelled names to create copycat websites. "In short, the potential for consumer harm is great, and ICANN has the responsibility both to assess and mitigate these risks," the letter continues.

Before approving any new gTLD applications, the FTC has urged ICANN to implement the new programme as a pilot and substantially reduce the number of gTLDs that are introduced as a result of the first application round. It also urges ICANN to strengthen its contractual compliance programme, in particular by hiring additional compliance staff.

It also recommended that ICANN should develop a new on-going programme to monitor consumer issues that arise during the first round of implementing the new gTLD programme. Additionally, each new proposed gTLD’s risk of consumer harm should be assessed as part of the evaluation and approval process, and the accuracy of Whois data should be improved, including by imposing a registrant verification requirement, the FTC said.

The FTC letter warns that: "If ICANN fails to address these issues responsibly, the introduction of new gTLDs could pose a significant threat to consumers and undermine consumer confidence in the internet".

TAGS: compliance | business | commerce | law | Internet Corporation for Assigned Names and Numbers (ICANN) | enforcement | internet | e-commerce | United States | standards | regulation

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