Class Action Lawsuit Filed Against Network Solutions, ICANN

Lawsuit stems from “customer protection measure”.

My prediction has come true: Kabateck Brown Kellner, LLP has filed a class action lawsuit against Network Solutions for its practice of preemptively registering domains names searched for on its site. This issue was uncovered on the DomainState blog in January and set off a media firestorm. On the day the news broke, I wrote:

“If Network Solutions doesn’t stop this practice immediately, they are guaranteed of lawsuit in the near future.”

Kabateck Brown Kellner, LLP issued a press release (posted to the domain community by Domain Name News) today announcing the lawsuit. The suit also names ICANN:

Network Solutions’ scheme is made possible by ICANN. ICANN allows companies that sell domain names to avoid paying registration fees for names cancelled within five days. Thus, Network Solutions can defraud customers at no cost to itself.

ICANN is moving to make its $.20 registration fee non-refundable, which would effectively shut down Network Solutions’ practice. Also, it’s notable that the law firm didn’t sue VeriSign (NASDAQ: VRSN). It’s actually VeriSign that enables this activity by choosing to provide the refund. The .org registry started charging a “restocking fee” that has curtailed domain tasting on .org domains.

I’m sure the law firm didn’t name VeriSign because of that company’s deep pockets.

For more on the Network Solutions fiasco, see Editorial: Where Network Solutions Went Wrong.


  1. says

    For the first day or so, NSI’s on-line policies did not indicate that it was all reserving domains searched through its site. As a result of the firestorm, they added clear language indicating what they were doing.

    I posted about the legal liability issue here
    and analyzed the web site changes here.

  2. says

    Because of the disclosures included on the NSI web site shortly after starting this new (really stupid and transparent)’reserve’ policy, I can’t imagine that this class action will survive very long in the courts. The class would likely be limited to those people who searched for domain availability before the notice went up on the netsol site.

    Even so, there won’t be very many people in the class who can show real damages. This lawsuit smacks of grandstanding by Brown Kellner, LLP.

  3. Andrew says

    Enrico, I think most class actions are like this. But most of them settle out of court, right? NetSol will give “coupons” for half off domain registrations — so just $17.50! — and Brown Kellner will walk away with a $5 million payday.

  4. says

    Too many large companies (and registrars of all sizes) have been getting away for years ripping people off with impunity. Registrar warehousing, domain kiting, front running, shill bidding, backroom deals that put thousands of individual domain registrants at risk. Grandstanding or not, turn up the spotlight … like yesterday.

  5. says

    Andrew. You may be right. It all depends on how hard NSI fights. NSI would have to WANT to settle to avoid bad publicity. Otherwise, the case would go to a class certification hearing where a judge could throw it out because there are not enough common issues (ie every Plaintiff is different on the issue of causation and damages) adn any number of other reasons.

    It would be great if Brown Kellner could keep the case live long enough to dig into NSI’s internal communications on this policy. It would be nice to know what bonehead thought up the idea in the first place :-)

  6. says

    Class action lawsuits are difficult to litigate. However, the key to a settlement is certification of the class. If a court certifies the lawsuit as a class action, then the Plaintiffs will have leverage. The discovery process can be very expensive and settlements are preferred for judicial economy reasons.

  7. says

    I think NSI will fight to the death on this one, including certification. I just don’t see the liability here once they posted notice on their site. Consumer litigation is about fraud and deception. Once the notice was posted, how could consumers have been deceived? I assume they will say that most consumers would not read the notice. We’ll see…..

    Ramiro is right. Defining and certifying the class is key.

  8. Andrew says

    I’m generally opposed to class actions like this as they enrich the lawyers with little benefit to the class. However, I think this will at least get NetSol to push toward ending its practice.

  9. Liz says

    Who are the registers then who don’t rip their customers off? I only hear about the bad ones, it’s difficult to find recommendations.

  10. says

    Who are the registers then who don’t rip their customers off?

    Unfortunately you’ll get variable answers on that, Liz. And that’s not inclusive of defining the word “rip” itself.

    I won’t be surprised if Network Solutions chooses to fight this all the way, although they can also choose to settle. They’re not exactly a stranger to legal suits.

  11. Dave Trotter says

    Yes, class action makes the lawyers rich while the class gets nothing…. financially… but the problem is brought to light, and often resolved.

    It’s time to do it again. Cloundmark Authority was added to NS email products without notice (until 14 days later). Thousands are complaining in blogs of not receiving e-mails from customers, not receiving orders, or not being able to communicate with their customers. Damages should be far easier to prove than in the ICANN action.

    NS is being unresponsive.

    Fire up the machine!

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