Was Domain Marketing Letter Fine Justified?

domain name justice

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:

  1. 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.”
  2. “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.

9 thoughts on “Was Domain Marketing Letter Fine Justified?

  • Avatar
    June 19, 2018 at 8:57 pm
    Permalink

    A quick follow-up and afterthought. Domain names are either a primary or secondary income source for many of your readers Robert. We each do it a little differently, but at its base level we sell domain names. I think we should be united and work together, and despite being competitors in some instances strive to ultimately service customers. We all benefit from a healthy market with high consumer trust.
    We all face a common threat, one where non-conventional Domain business models/strategies (like domaining and monetisation) are being vilified.  Attacking each other only serves fragment our collective position of strength.

    Like
    George Pongas likes this.
    • Avatar
      June 20, 2018 at 12:08 pm
      Permalink

      I agree.

      Like
      George Pongas likes this.
  • Avatar
    June 19, 2018 at 9:10 pm
    Permalink

    Thanks Robert for this feature, and might I say, a well informed one at that.

    You mentioned “…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?” I am interested who the other fined companies were?

    I am not well informed about what/how  DNC were operating.. However you mention that the only difference is New Domains adherence to the required wording… 

    I beg to argue that the difference is significant. Our offering, delivery, longevity, reputation and dedication to our customers. The only similarity I see is that we use the same communication medium. 

    The team at New Domain work tirelessly with the intention to support and to assist.

    Re fees: New Domain decided to focus on providing a high level of support, from it’s base here in Australia, and as such we have higher operating costs / fees.

    A good judge of how well we are received can be see from our review page (900+ review) here: https://newdomain.com.au/reviews/

    And Google review page (100+ review) here: https://goo.gl/Up2eeT

    We love to help people who need extended support and we get a kick out of helping new businesses get started on their digital journey.

    I think the below two reviews best summarise our intention / care / level of service:

    “Starting a small business can at times feel overwhelming. Especially if like me, you are not a technical savvy person. So I was delighted at the level of customer service I received from Darren to help step me through why securing a domiain name was important and jhow it can protect my new business and provide a platform to hopefully grow my business going forward. He was patient, relevant and competent. Thank you!”

     

    “Receiving your letters when I registered ABNs made me think of you when it was time to get a domain. Quick research showed your pricing was good so, given I had already been introduced to your services, I was happy to use you. Website is super easy to use, very readable and your services/what they do are crystal clear. Paying for and having everything confirmed was basically immediate (not at all a 24/48 hour wait). I wanted to link your domain to my Squarespace website and Squarespace email. For both things I was really stuck on Squarespace & your site but for both I contacted customer service and each thing was sorted within less than an hour! I don’t know how you guys do that with so many clients who probably need help. The chat box on site was also really good – someone was immediately available. He also asked for my Squarespace log in details and I was uncomfortable about giving per such private, personal and important information. He immediately said that everything could still be solved on your end and it was! So I’m very happy so far.”

    • Avatar
      June 20, 2018 at 12:07 pm
      Permalink

      Hi Jonathan,

      In reply to your question:

      You mentioned “…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?” I am interested who the other fined companies were?

      Perhaps I wasn’t clear enough, I was alluding to AAMI and Fisher & Paykel. They were also fined, but the amounts were more reasonable, as opposed to millions of dollars.

       

       

       

  • Avatar
    June 20, 2018 at 12:43 pm
    Permalink

    How much do you pay to register your domains?

    Is $249 a ripoff being 10 x as much?

    Should the public be protected from ripoff merchants?

    They get no sympathy from me.

    • Avatar
      June 20, 2018 at 2:09 pm
      Permalink

      We live in a capitalist free-market system.

      Consumers and/or end-users shop around and if they think a price is too high… if they don’t like the price… they look somewhere else for a cheaper service. However, cheaper is not always better, as we all know. Cheaper can often come with problems that are way bigger than price.

      I’m sure people would rather an Apple iPhone X was only $1500 instead of $2000.

      I’m sure businesses would rather Melbourne IT charge only $99 for domain name registration, instead of $140.

      What sort of work do you do, David? Would you like to be told how much you (or the company you work for) are allowed to charge for your product or service?

      As long as people aren’t being mislead, the market should decide what is reasonable to pay, as is the current system.

      We can all see what has happened to the TV Sales business model. They all undercut each other so hardcore, that Dick Smith (and now Kambos in Western Australia) had to close their doors. They cut their own throats.

      This is what companies like GoDaddy and Crazy Domains have done, and ARE doing, to our industry. They have undercut domain name registrars and resellers so badly, that $50 or $100 looks “expensive” for a domain name registration.

      It’s not expensive. These big companies have and are actually hurting the quality of our product (domain names) and service by undervaluing what a domain name is really worth.

      If anything, Melbourne IT have got the price point right. They aren’t silly. For the amount of work and effort that goes in to providing a customer a “good service”, that’s the figure they came up with. And they’ve proudly sticking by that figure.

      I believe hand-registering an Australian domain name should be at least $100 for a two-year registration.

       

       

      • Avatar
        June 20, 2018 at 2:44 pm
        Permalink

        So $249 is a ripoff.

         

        Oh and MelbourneIT do only charge $30 via their secret backdoor website -> netregistry.com.au

         

        You’re welcome!

         

  • tim
    June 25, 2018 at 12:21 am
    Permalink

    “As long as people aren’t being mislead,” Robert

    This issue has been an ultimate bug bear for me since i first heard of its yearsssssssssss ago, so i am talking right now as “tim the web designer with clients”.

    these companies deserve everything they get and more, it needs to be stopped and after the judgement went down a day or so later a client forwarded me an email with exactly the same process trying to be achieved ( it may not have been them but it happened) maybe others are now getting in on the gig?

    as a web designer who looks after my clients domain portfolios i get loads of emails ” tim is this a scam” these companies are costing ME and my clients TIME and when they don’t ask me = MONEY !

    i have absolutely no pity for the result on the scammers, one mob has an “office” in collins street melbourne, i went there years ago, its a serviced office and the receptionist didn’t know they existed.

    this does nothing for the cred of the industry, this week i have a client negotiating a large $$$$ domain buy only because they trust me and i trust the company i am dealing with, also another client wants another 4 unique domains possibly hand regs for a new project and they come to me for trust, but also these people are bombarded with cleverly worded documents, the reason why its @ $249 is based on strike rate i suspect.

    send 100 get 1 hit, cost =$149, net $100 after postage and rego. the real cream comes if the person doesn’t realise they have been scammed and RENEWS !!!

    its bad for the industry on all levels

    i’m NOT against charging more then $22 for a domain as there is work involved, what i am against is tricking people into paying an “offer/invoice” by saying “this is not an invoice” for a domain they most likely don’t need.

    oohhhh by the way, one company i phoned to ask about the domain purchase for a client who fell for the letter said when i asked ” my client would like a refund because of your deception ” replied ” if you have a stupid client its not my problem and you can go get f**ked ”

    tim

    • Avatar
      June 25, 2018 at 1:00 pm
      Permalink

      Fair call, Tim.

      I agree, scammers, misleaders and rude/bad service operators deserve to be taken down.

      I think we can all agree though, there’s a big difference between “scammers who mislead people” and legitimate companies sending letters/advertising material that are providing a high-quality service at a high-end price.

       

Comments are closed.