How Cybersquatters Make Money

By: Anti Spam League

Getting clicks and traffic by accident appears to be big business. And by ‘big’ I mean worth MILLIONS of dollars! While typosquatting is unfortunately not a new online marketing practice, its use and, moreover, its ABUSE has grown significantly and exponentially since 2000.

Cybersquatting means registering, trafficking in or using a domain name with the intent to profit in bad faith from the goodwill of a trademark that belongs to someone else. It commonly refers to the practice of buying up domain names that use incorporate the names of existing businesses with the intent to sell the names for a profit to those businesses. The term derives from squatting, the practice of building some kind of home or dwelling or in some way using someone else's landed property without their permission.

Typosquatting, although very similar to cybersquatting, has a slightly different, but much more serious purpose: it is employed by people who want to divert traffic to their websites. Typosquatters typically purchase a domain name that is a variation of a popular domain name with the expectation that some of the traffic for the original web site will stray to theirs by capitalizing on web surfers? misspellings of those popular domain names.

How can large companies, with all their IT experts, not foresee something like this happening? How come they allow tons of opportunistics to make revenue every time innocent Internet users mistype the original brandnames or trademarks? The answer is, cybersquatting originated at a time when most businesses were not savvy about the commercial opportunities on the Internet. Since opportunities like these rarely knock on one’s door more than once, these so-called ‘entrepreneurs’ reserved and registered domain names corresponding to the names of well-known businesses with the intent of selling the names back to the companies when they finally woke up. Commercial domain names are obtained from companies that are authorized to ensure that a domain name you want is unique (no one else already has it) and issue it to you if it is. However, these registries make no attempt to determine whether the domain name is one that rightfully ought to go to someone else. The principle is ‘First come, first served.’ Panasonic, Fry's Electronics, Hertz and Avon were among the first targets of cybersquatters. Well-known products, sports and political figures and other celebrities are also among the victims. Today, although the practice itself is growing, opportunities for cybersquatters are rapidly diminishing, because most businesses now know that nailing down domain names is a top priority. Although trademark laws may offer some protection, it is often cheaper to buy the domain name from the cybersquatter than it is to sue for its use: these processes cost money, and though you may be able to recover your costs and attorney fees if you win, there is no guarantee; it's completely up to the judge. Examples of domains sold by cybersquatters to companies include drugstore.com, furniture.com, gardening.com, and Internet.com. Cybersquatters may also regularly comb lists of recently expired domain names, hoping to sell back the name to a registrant who inadvertently let their domain name expire.

How do you know if the domain name you want is being used by a cybersquatter? As a general rule, first check to see if the domain name takes you to a legitimate website.

If it takes you to a website that appears to be functional and reasonably related in its subject matter to the domain name, you probably are not facing a case of cybersquatting. But if you own a trademark and find that someone is holding it hostage as a domain name until you pay a large sum for it, you may be the victim of cybersquatting. You can sue to get your domain name -- and possibly some money damages -- under a 1999 federal law known as the Anti-Cybersquatting Consumer Protection Act or you can initiate arbitration proceedings under the authority of the Internet Corporation of Assigned Names and Numbers (ICANN) and win the name back without the expense and aggravation of a lawsuit. The ICANN arbitration system is considered by trademark experts to be faster and less expensive than suing under the ACPA, and the procedure does not require an attorney.

Typosquatting, however, is a much more dangerous practice because it is commonly used by pornographers. Typosquatting is based on the probability that a certain number of Internet users will mistype the name of a web site (or its URL) when browsing the web. Typosquatters usually register several possible typos for a brand name or web site known for its high traffic, then monitor to see how many clicks per day each of their typo domain names receives, and finally use the information to sell advertising for the web sites that receive a high volume of accidental traffic. Ironically, advertising revenue might come from selling ads to the original site's competitors or by providing redirect pages to related products or services.

There are multiple ways in which typosquatters may turn typos into revenue. When surfers mistype popular URLs, squatter companies throw up ads in hidden browser windows, making money off of ads few people see. As a consequence, companies such as AT&T Corp. and The New York Times are paying for ad impressions even though the ads are buried. Finally, when visitors try to close their browsers or otherwise leave the web site in question, there is one more attempt at monetizing the mistake. Another browser window usually pops up, with a different web site’s name. This one contains more advertisements. It’s a never ending story that sure gets on the nerves of most of us!

The success of companies that practice Cybersquatter points out some serious flaws in the Internet's domain name system and in two of the web's most prominent revenue models: Affiliate Programs and Advertising Reselling. Advertising resellers such as 24/7 Media Inc., Advertising.com Inc. and iBoost Technology Inc. contract with large advertisers and then automatically feed ads onto thousands of web sites. The automated method of placing ads on sites can make tracking where those ads end up a very difficult task.

Needless to say, typosquatters do not think there is anything wrong with using people’s errors to grow traffic. However, it is a whole different story when typosquatting is employed by pornographers to attract children to their websites. Until now, there have been few methods of stopping pornographers and others abusing the domain name system from misleading children and adults into accessing sites masquerading as popular legitimate sites. Many adult web sites misrepresent their content or the nature of their sites by registering domain names that are intentionally confusing, using page coding designed to mislead search engines, distributing false advertising to promote site traffic, or hijacking visitors of another site.

The problem is particularly serious when children are involved. Just as adults do, children get spam and unsolicited instant messages with graphic sexual images, content, or links to pornographic sites. Statistics show that 20% to 30% of traffic to adult sites is comprised of children. Many masquerade as messages from trusted friends or web sites. Children also may be tricked into visiting a pornographic site when they search for age-appropriate words or phrases on a search engine. Even if you find it hard to believe, depending on the type of marketing or advertising model used by a particular web site, there may be no incentive to filter children. In fact, targeting children may be an effective way of increasing ad revenue. The name of the game is web site traffic where adult sites are concerned. So they cannot rely just on keywords to increase traffic.

As part of the Amber Alert legislation, typosquatting is now a crime in the United States. Porn network czar John Zuccarini was the first person charged under the new typosquatting law by the U.S. Attorney’s office in the Southern District of New York and pleaded guilty in 2004. He was sentenced to two and a half years in prison. Until the enactment of the Protect Act (most commonly known as the ‘Amber Alert’ legislation), stopping typosquatters was a civil matter, or perhaps (under extraordinary circumstances) a consumer fraud matter. The sites Zuccarini has been found to have cybersquatted include those referring to Nicole Kidman, Backstreet Boys, Encarta and others. His manipulation of Aaron Carter's and Britney Spears' names is among his more recent abuses. Courts have already held that there is no legitimate purpose for Zuccarinin registering and using the typo-domains other than to trade on the popularity of the underlying domain names, celebrities and products involved.

In summary, cybersquatters and typosquatters are unethical companies and individuals that want to profit from your family’s and your own confusion and spelling mistakes. If you want to help protect your children and others online, drop by website and report those who are engaged in these and other unscrupulous online marketing practices. Become a member for free and sign up to receive our Newsletters with useful and valuable information on how to handle abuses on the Internet. Also, look for more articles on related topics on our web site. You will learn how we can really make a difference by working together with consumers and companies to preserve Internet users’ freedom and privacy while promoting loyal advertising and good art on marketing practices.

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