How Domain Kiting Works
Domain kiting is a deceptive method of using domain names for financial gain without every having to pay the registration fee for the domain name. Domain kiting is an ICANN exploit that takes advantage of the grace period that is provided when you register for a domain name. Online criminals use the domain registration process and the grace period for financial gain and to test the waters for the value of the domain name in resale.
How Domain Kiting Works
Domain kiting is a type of Internet fraud that online criminals use to exploit ICANN (Internet Corporation for Assigned Names and Numbers) registration and the five-day grace period ICANN allows for registering a domain. Criminals register domain names either through their own name or through a bogus name and address. They proceed to generate revenue through a variety of marketing tools and applications during the five-day grace period. When the five day grace period expires they either request a refund and move on, or they continue to re-register the domain name under yet another bogus name and address and continue to use it for another five days.
Usually online criminals purchase an entire group of expired domain names that have high search engine rankings. The domain registrants use the well-indexed pages to make a financial gain by loading up the page with advertisement links which get click throughs from the traffic coming to the domain. At the end of the five days if the site has proved to be financially viable, the criminal then re-registers the domain under a different registration name and address. The cycle continues and the registrant never pays any domain name registration fees.
The domain name registrants also use misspelled domain names from well known brand names that receive tons of traffic. The criminals who register the domain make financial gain from people misspelling the well known brand name. This is a type of Internet fraud that involves fraudulent use of brand names that are copyrighted and patented.
Effects of Domain Kiting
As it stands right now, ICANN has not taken any measures to push legislation that will disallow the refund after five days despite the efforts of concerned business owners trying to approach the ICANN board.
Meanwhile the issue is making things worse for the business owners and other people who face the possibility of higher registration prices to make up for domain kiting schemes or the possibility of having to pay exorbitant amounts of money to secure a domain name from one of the criminal registrants.