Four companies that allegedly used deceptive spam messages and
appeals to patriotism to sell domain names that don't work for most
internet users, including .usa, .brit and .scot, have settled US
federal charges by agreeing to pay $300,000, money which will go
back to their customers.
The settlement involves LTD Network, Quantum Management, TBS Industries and Thomas Goolnik, who sold domain names ending with .brit and .scot. After last year's September 11 atrocities, they also began an e-mail campaign advertising .usa domain names. Subject lines in the e-mails read: "Be Patriotic! Register .USA Domains."
They failed, however, to disclose that such web addresses operate outside ICANN's domain name system and therefore cannot be accessed without special software. The FTC, which filed a complaint against the companies with a federal court in Chicago, claimed that they violated US laws by misleading consumers, many of whom paid $59 for each bogus domain.
Under the terms of the settlement, which ends the litigation, the four companies are barred from making misrepresentations about the usability of domain names or about the nature of any product or service they sell over the internet.
They are also barred from selling customer lists, whilst the settlement contains record-keeping requirements to allow the FTC to monitor compliance.
According to Reuters, Thomas Goolnik claimed he was tricked into settling with the FTC and said he would appeal a federal court decision that shut down his business in March 2002.
