Was Domain Marketing Letter Fine Justified?
In 2017, a company called Domain Name Corp and Domain Name Agency were sending out unsolicited “domain name available” advertising notices. It appears they’d been doing it for around 2 years. The Federal Court of Australia ordered they cease sending the letter for a period of three years, because the letters looked “misleading”, because:
- The letters didn’t state the clause, “This notice does not relate to the registration of your current domain name. This is not a bill. You are not required to pay any money.”
- “The Domain Companies misled businesses into thinking they were renewing payment for the business’ existing domain name, when in fact the business was paying for a new domain name,” ACCC Acting Chair Delia Rickard said.
It has now been reported that the company must pay nearly $2 million as a fine for “misleading” customers.
On first hearing about the amount of this fine, something didn’t feel right. Fair enough is a letter is misleading, there should be a fine and the company should have to fix the problems. But how could a domain name reseller, even though they were sending misleading letters to customers, be fined such a massive amount when other higher-profile companies have recently been fined in the past for doing pretty-much the same sort of thing, but receiving much lower fines?
Were the scales of justice wrongly weighted because this occurred in the domain name industry?
It certainly feels like the Australian domain name industry is being unjustly targeted over the past few years.
To put things in perspective, around this same period of time, another Australian domain name company called New Domain, a company owned and operated by a well-known name in the domain name industry, Jonathan Horne, was also sending out unsolicited domain name registration letters.
As far as we know, New Domain was NOT ordered to cease sending domain name registration marketing notices during this time, and in fact, still sends them out to this day.
The biggest difference between the two domain name registration letter companies, from what I can tell, is that Domain Name Corp were sending letters to existing .com.au owners, informing businesses they could also register the matching .com or .net.au of their business website. In comparison, New Domain have been merely letting new businesses know, who didn’t yet have an existing business domain name, that they can register a “new” domain name for their business.
Another difference is the price. Domain Name Corp were charging $249 for a two-year registration, whereas New Domain have been charging $120 for the same domain name registration service.
One of Australia’s biggest domain name service providers is Melbourne IT. They have always charged $140 for .com.au domain name registrations per 2 years. So, in both cases, the fee being charged for a domain name registration doesn’t sound too unreasonable to me. We live in a free capitalist market, and it depends on the quality of service you receive. If the current market isn’t prepared to pay a certain price for a certain service, they simply won’t pay it! It’s the reason people will pay $2000 for an Apple iPhone X instead of $500 for a Samsung Galaxy phone that practically does the same thing.
Melbourne IT (especially through their companies TPP Wholesale and NetRegistry) have been known to accidentally “drop” customers’ domain names from time to time due to system malfunctions. It happened to me personally with my PerthWebsites.com.au domain name. I was minutes away from losing it, due to a TPP system error. Perhaps the other companies mentioned have a perfect track record? In that case, maybe it’s worth paying the higher fee?
I’ve managed to get my hands on an example letter that New Domain has been sending out over the past few years, and still sends out to this day, and they do indeed seem to have the correct “warning label” wording at the bottom of their letters that state the required: “This is not a bill. You are not required to pay any money.”
They are also not sending out domain name registration letters to businesses who already have an existing domain name. One can see how sending a “matching domain name available” notification to a company who already has a domain name, may confuse the person paying the amount indicated on the letter into thinking they are paying for the existing domain name, rather than a new one.
I guess this is why New Domain have been allowed, and continue to be allowed, to send out their new domain name registration letters?
Still, Domain Name Corp have been fined nearly $2 million. And this does seem to be excessive, because, as the ACCC officially reports, Domain Name Corp didn’t place the required disclaimer at the bottom of the letters, prominently enough, and was misleading because it offered to “brand-protect” their existing domain name with other TLD variations.
Apparently, people don’t bother to really read letters sent to them and simply just pay the amount shown?
In fact, it appears The Court is fine with Domain Name Corp sending out these exact types of letters again in the future, provided they wait three years and include the “This is not a bill” disclaimer.
This is proven by the ACCC officially stating in the judgement: “The Court made other orders by consent, including injunctions for three years against each of the Domain Companies … These injunctions include a requirement that if any of the parties decide to send out further notices, each notice has to prominently include…” the “This is not a bill” disclaimers.
So, if Domain Name Corp are allowed to send the letters out again after three years, as long as they do it in the right way, why the incredibly-high fine???
Is there no blame at all to be placed on businesses for not reading or knowing what they’re paying?
Are there any other sorts of precedents relating to this huge amount of money being fined for advertising or marketing in Australia that is deemed to be “misleading”?
Domain name resellers are not the only kinds of companies to send out borderline-clever-marketing snail-mail notices like the ones mentioned above, that some people take as “misleading”. Many insurance and white-goods manufacturing companies also send out unsolicited notices that roughly resemble invoices or warranty renewals, or pay for advertising that has “fine print” that’s deemed to be “too small” by governing bodies.
For example, the Sydney Morning Herald reported late last year that the huge insurance company AAMI, was fined $43,000 for “false or misleading advertisements relating to its home insurance”.
Another example, also reported by the Sydney Morning Herald in 2014, stated that the massive electrical-goods company, Fisher & Paykel, was fined $200,000 for sending letters to customers to “buy an extended warranty to protect their product against repair costs, while putting the truth in fine print”.
So, in what bizarre universe is it justified for a very small company to be fined $2 million for sending out misleading “domain name available” notices, when AAMI and Fisher & Paykel were fined ten percent of that amount?
It certainly does appear that domain name industry businesses sure do cop a hammering if they take one step out of line!
If you’re asking me, especially as Domain Name Corp have basically been told they’re allowed to keep sending the letters in three-years time, as long as they make a few changes, this fine and negative coverage is over-the-top.
In closing, I’ll leave you with a complaint from a customer who received a domain name registration notification from New Domain, to not only have New Domain successfully defend their marketing campaign in this response, but they also reecived an auDA (au Domain Administrator) board member (who wasn’t a board member at the time) comment that the $120 fee seemed “fair” for the service provided.
Posted by Joel at DNTrade
I registered a new business name with ASIC about 2 weeks ago. Five business days after I registered the name, I received a letter from New Domain Services (newdomain[dot]com[dot]au) offering to buy the .com.au domain version of my business name.
The letter came to my registered postal address with ASIC (which is publicly available of course). I know you can publicly look up business registration details but I do not believe this was a case of some random typing in my newly registered business name into ASIC’s systems just days after I registered it, then checking the .com.au availability of the domain, and then sending me a letter offering the .com.au domain (at the fantastic price of $120 mind you)
I’d really like to know how this came about but ASIC weren’t much help. I should just ask Jonathan Horne directly (the registrant of aforementioned domain) I guess, but I wanted to check if anyone else has received a similar letter from this reseller?
Jonathan from New Domain replied:
Hi Joel. You can ask me directly 🙂
Let me start from the top as you have raised some important topics.
1) You would not have received a letter if the domain name was not available when the letter was prepared. It would be pointless sending a marketing letter for a domain we could not register for you. As you understand, it takes a period of time to prepare the data and have a letter sent, therefore your situation can happen from time to time. If you called us or went to our site to register the domain we would have informed you it was not available.
3) The letter has been very deliberately done NOT to look like an invoice. We make it very clear it is an invitation to register a new domain name only. We even go to the length of a statement on letter “This is not an invoice, bill or statement …”. This is a really important point, and something we take seriously as we want to use mail as a marketing channel …
3) We do use Synergy wholesale, however I can assure you we did not obtain your information from there. As you stated, the actual information we obtained is publicly available, the process for which we are able to find is our business.
4) The $120 reg fee is reflective of the service we provide and the operating costs we incur.
Feel free to call the number on letter and you can speak with me directly. We are building a business and any feedback or suggestions are always welcome.
Although Jonathan says, “The letter has been very deliberately done NOT to look like an invoice.” On seeing the letter myself, the only real differences I can make out are the “This is not a bill” disclaimer and that there was another paragraph of writing explaining the domain name registration process, and that the registration was for a “new” domain, instead of brand-protecting an existing one. Other than that, if you look at both forms of domain name registration notification letters from a few metres away, they look very very similar.
It’s pretty lucky for New Domain to have a previous company’s marketing technique to learn from and improve. It helps them to not make the same mistakes. It appears that those slight changes New Domain have made, is what deems a domain name registration notification to NOT be misleading, and a perfectly-fine way to market to a new business that their domain name is available to register, as opposed to one that cops a $2 million fine and three-year ban.