September 25, 2003
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VeriSign has settled charges brought by the Federal Trade Commission that the company's Network Solutions unit tricked consumers into registering Internet domain names with its service.
By Paul Festa
The settlement, made public Wednesday by the FTC, concludes the FTC's investigation into VeriSign for alleged deceptive marketing practices.
Under the settlement, Network Solutions is prohibited from falsely stating that a domain is about to expire, or that a domain name transfer is a renewal.
VeriSign must also pay consumers who fell prey to the alleged scheme under terms of a class action lawsuit settled previously.
"This matter relates to a marketing campaign that was discontinued over a year ago," the company said in a statement. "VeriSign cooperated fully with the FTC and is pleased to have this matter resolved."
Network Solutions, which the U.S. government originally awarded monopoly oversight over the issuance of domain names, now shares those responsibilities with dozens of competitors. While still the largest domain name registrar, it has fought tenaciously for its share of the market, to the point that several of its schemes have drawn fire from critics and regulators.
Just last week, the company came under intense criticism for redirecting Web traffic to unassigned domains to its own Web page. That move earned the company an antitrust lawsuit by a search engine and the ire of the Internet Corporation for Assigned Name and Numbers (ICANN), a government-sanctioned group with broad authority over the Net's infrastructure.
Other Network Solutions marketing controversies include the auctioning off of domain names it later withdrew after deeming them inconsistent with its policy of shunning the sale of "objectionable, inappropriate or trademarked material."
According to the recently settled complaint, Network Solutions sent out notices warning consumers that their domains were about to expire and offering to renew them. Many of those domains were months or years away from expiration, the FTC claimed.
Also, Network Solutions allegedly obscured the fact that in many cases the domains were registered with competitors, and that the "renewal" would in fact transfer the domains to Network Solutions, with a resulting price increase.
Security software provider VeriSign in 2000 acquired Network Solutions in a deal then valued at $21B. The company today has a market capitalization of $3.3B.
The settlement, entered into earlier this month, does not include an admission of guilt by VeriSign, the FTC said.
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