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RegisterFly was a New Jerseymarker (U.S.marker) based internet hosting and domain name registrar that had their ICANN-accredited status terminated in March 2007.

History

RegisterFly formerly acted as a reseller of the services of eNom, but became an accredited registrar in its own right in 2006 through the acquisition of "Top Class Names" sold to the company by Directi with Bhavin Turakhia completing the asset transfer. By February 2007, the company was registrar for approximately 2,000,000 domain names held by about 900,000 customers. Notable clients of RegisterFly included the government of Thailandmarker, the Easter Seals charity, and pop star Michael Jackson.Business Week, Steve Hamm, Allegations Fly at Registerfly, Claims of embezzlement and complaints from irate customers threaten to derail the small domain-name registrar, March 8, 2007 In 2007, ICANN launched an investigation of RegisterFly amid allegations of fraud. No lawsuits were initially filed between the governing domain body and the company; however, there was during this time a lawsuit between the company's two owners, CEO John Naruszewicz and Kevin Medina. RegisterFly's website went offline for a time, causing serious concern amongst registrant customers of RegisterFly.Netcraft news, RegisterFly Site Goes Offline, March 6, 2007Hostsearch news, Netcraft Reports RegisterFly Site Offline, March 8, 2007
One users support ticket history, including tickets closed without resolution.


The incidents and lawsuit that then followed were the result of a feud between RegisterFly co-owners Kevin Medina and John Naruszewicz, who were at once both business and intimate partners.Computer Business Review Online, Kevin Murphy; ponders registrar crackdown, March 22, 2007. As problems at RegisterFly gained momentum, their ten year long business and romantic relationship abruptly came to an end. The lawsuit between the former partners alleged, among other matters, that Medina misappropriated corporate funds for personal use. However, the court ruled on March 8, 2007, in favor of Medina, stating that Naruszewicz had no ownership over RegisterFly. Medina resumed control over RegisterFly, but not before Naruszewicz published a public apology to customers on the company's web page.

On March 28, 2007, U.S. District Court Judge William Osteen unsealed a class action lawsuit filed by Attorney E. Clarke Dummit against RegisterFly, eNom, and ICANN. The lawsuit alleges that RegisterFly systematically defrauded customers attempting to register or renew Internet domain names.

Due to the reported negligence of RegisterFly in protecting its customers, angry calls have arisen for oversight of the domain registrar industry.Business Week Online; "How Secure Is Your Domain?" Problems at RegisterFly.com shed light on loose oversight of Net addresses", March 26, 2007 On March 16, 2007, ICANN publicly announced that Registerfly will cease operating as an ICANN-Accredited Registrar on March 31, 2007.ICANN, Official ICANN announcement, March 16, 2007 ICANN officially removed Registerfly's accreditation on March 31, 2007 and ordered Registerfly to cease operation and remove the ICANN logo from Registerfly's website. However, Kevin Medina invoked the arbitration clause in the registrar's accreditation agreement which allows him to continue to operate as a domain name registrar through an arbitration process laid out in the contract. On April 17, 2007 A Federal judge granted a temporary restraining order to ICANN compelling Registerfly to turn over all registration data within 48 hours and to update it every seven days. Medina failed to do so, and ICANN was granted a civil contempt order against Registerfly on May 9, 2007, compelling Registerfly to comply with the preliminary injunction. Because Kevin Medina failed to show up for the hearings, the judge issued a show cause why Medina should not be found personally in contempt of court on May 16 and ordered another hearing for May 25, 2007. Kevin Medina appeared in court on May 25, 2007, and was found personally in contempt for not complying with the previous orders. The temporary restraining order was made permanent. He was given 48 hours to post a notice on his website stating that Registerfly's accreditation had been terminated, and until June 1, 2007 to give ICANN all registrant data. Registerfly could be fined $5,000 USD a day for failure to do so. Registerfly initially posted the required ICANN notice in the help section of their website; however, the notice did not meet all of the order's requirements, especially as to placemnent on the top one-third of every page in a fourteen-point bold typeface. RegisterFly has since printed the required notice on its home page.

Apparent Attempts to Circumvent the Court Order

On February 2, 2008 the domain regfly.com was registered. The RegFly logo and web site is identical to those of RegisterFly except for the different name itself.

The company appears to be experimenting with varying configurations for the old registerfly.com domain. At times the registerfly.com domain redirects to regfly.com. At other times it does not (although the RegFly logo is still displayed). The court-ordered notification is not displayed at regfly.com. At times the notice is not displayed at registerfly.com, which is a violation of the court order. RegisterFly's website is now completely offline.

Ownership lawsuit

In February 2007 eNom formally severed ties with RegisterFly over continued consumer complaints. John Naruszewicz, a co-owner of RegisterFly, filed suit against his business partner, CEO Kevin Medina (they each were thought to have owned 50% of the company). Medina was fired by RegisterFly, reportedly over civil liabilities relating to allegations of funds mismanagement but Medina and Naruszewicz continued to dispute legal control over the company. Meanwhile RegisterFly filed suit against Kevin Medina, alleging he had stolen company funds for a $27,000 male escort service, a $6,000 liposuction procedure, a $10,000/month penthouse apartment in Miami, Floridamarker and a $6,000 chihuahua dog. This alleged misappropriation of funds, along with Medina's lavish spending, was said to have caused the company's woes.IT News Australia, Tom Sanders; ICANN pulls Registerfly's licence, March 20, 2007 Court documents claim over 75,000 customer domain names were forfeited by RegisterFly.com in one month alone because of the company's failure to pay registration fees. RegisterFly management also claimed that Medina deleted passwords and access to billing system information to prevent the issuing of customer refunds. However, Medina reportedly accused his ex-lover Naruzewicz of spending $60,000 in company funds on Morrocanmarker furniture for the Corporate office.

Website split and court ruling

In early March two competing and visually similar versions of the RegisterFly website were online. Naruszewicz had taken over control of RegisterFly.com and RegisterFly.net was set up by and under Medina's management, each through separate service providers. On March 7, 2007, reports emerged that Registerfly.net was effectively a phishing site gathering credit card sales but not providing a product or service.. Customers were urged to avoid all business with RegisterFly.net, and immediately, to change their passwords via RegisterFly.com, since even though the websites were separate, Medina still had a duplicate of all account information.

On March 8, 2007, then-CEO John Naruszewicz made an official announcement that having regained control of the website, he would begin rectifying payment problems and recovering lost domains. Later the same day, United States district court Judge Peter Sheridan ordered that legal control of RegisterFly be returned to an official ownership state as of Dec. 17 2006, when, at this time it was discovered that Medina never correctly filed proper ownership agreements and they were being drawn up and discussed. This ruling essentially allowed Naruszewicz to forfeit any claim to Registerfly with Medina being the sole owner and fully responsible for all company affairs. After the ruling Medina said, “This decision puts me back in the driver's seat. I believe I have built a lot of customers that will weather the storm.”Business Week, Steve Hamm and Megan Tucker; Judge Rules for Ousted Registerfly CEO, March 8, 2007 Without Naruszewicz at the helm, all Registerfly employees tendered their resignation on the same day as Medina's court victory. This was one of the final nails in the coffin for this company.

Naruszewicz said he would not appeal the judge's ruling and stated, “We lost and it's all over. The company will implode in days and 1 million domain names are going to be lost. It's a damned shame.”Netcraft News, Rich Miller; Two RegisterFly Sites Online as Ousted CEO Returns, March 12, 2007

ICANN and customer complaints

ICANN had received many customer complaints about RegisterFly. There were allegations of fraud dating back to 2004, including reports RegisterFly had suspended customer accounts and domain names in retaliation for complaints about overcharging. Kevin Medina also reportedly used the fake alias of "Tim Shor". eNom and ICANN also accused RegisterFly of inappropriately altering clients' WHOIS data. Complaints about RegisterFly were issued by other ICANN-accredited registrars, ICANN board members and the United States Department of Commercemarker.

On February 22, 2007 ICANN notified RegisterFly they would lose their accreditation as a domain registrar if certain issues were not corrected.ICANN, Kurt J. Pritz, Senior Vice President, Services, Notice of Breach of ICANN Registrar Accreditation Agreement, February 21, 2007 News sources reported that as of February 19, 2007 RegisterFly had suspended all business contact including e-mail, telephone and fax communications. Meanwhile ICANN was also the subject of criticism over their handling of RegisterFly's problems, with allegations of a “laissez faire attitude toward customer allegations of fraud”.

ICANN lawsuit and domain restrictions

On March 4, 2007 (a Sunday) ICANN announced it would file suit against RegisterFly in United States federal court the following March 6 for failing to comply with an audit as required by their Registrar Accreditation Agreement (RAA). However, ICANN deferred the suit after RegisterFly provided ICANN with minimum registrant information. ICANN also convinced several top-level domain registries who administer the .com, .net, .biz and .info namespaces, including VeriSign, NeuStar and Afilias to restrict pending-expiration Registerfly domains into a so-called “Server-Delete-Prohibited” status. ICANN stated, “This will prevent them from being deleted from the registry and becoming available for re-registration by others.”

.be domains

In 2005...2006, RegisterFly was the main registrar of .be domains (Belgium). This is due to various promotional zero-dollar offers for .be domains by RegistrerFly during 2005 and probably until late 2006. A significant part of the RegisterFly domain data base included .be domains. While the exact number can not be specified at this time, the number is supposed to be between 100 000 and 300 000 .be domains. When customers tried to renew such domains, the money was drawn from their credit card but domain renewal did not take place. So in their RegisterFly customer account, their domain was marked as renewed, while the Belgium organisation for these domains - equivalent to ICANN - had already made them available for new domain registrants. The Belgian ICANN equivalent refused to apply to these domains the status “Server-Delete-Prohibited”. This refusal was the answer for the corresponding request for various .be domains, for example for the domain notenverga.be ("rating...", related to the Geŕman site http://vox7.com = rating of election candidates.) - Source: infos7.com - So while ICANN coordinated some kind of protection, the registrants of .be domain had the risk to definitely lose their domains in case of some marketing value (high visitor frequence) to domain hunters. - The Registerfly case also demonstrates the need to regulate a generalized better protection of ownership for all national domains.

Termination of ICANN accreditation

On March 16, 2007, ICANN informed Registerfly that it will cease operating as an ICANN-Accredited Registrar on March 31, 2007, and also ordered RegisterFly to immediately cease using the ICANN logo and trademarks on their website.Malaysia Sun, ICANN terminates RegisterFly.com accreditation, March 17, 2007

“Terminating accreditation is the strongest measure ICANN is able to take against RegisterFly under its powers. ICANN has been frustrated and distressed by recent management confusion inside RegisterFly. Completely understand the greater frustration and enormous difficulty that this has created for registrants.” Dr. Paul Twomey, President and CEO of ICANN was quoted as saying.The Register, Drew Cullen; ICANN terminates RegisterFly with extreme prejudice, March 17, 2007 Twomey also called on RegisterFly to immediately initiate a “bulk transfer” (migrating or moving multiple names at one time) of all their domain names to another registrar, to protect the interests of their remaining clients.

On April 27, a US Judge ruled that ICANN could terminate RegisterFly's accreditation immediately.

Effects on industry due to RegisterFly collapse

In the wake of and in response to RegisterFly's collapse, ICANN is planning to reform the entire domain registration and registrar accreditation process. President and CEO of ICANN, Dr. Paul Twomey, stated:

Independent help for customers

For customers of RegisterFly the court ruling was exacerbated by reports that Medina's credit card provider Humboldt was terminating their services. Many customers had learned of these problems only after having failed in routine online attempts to renew or transfer domain names or pay for services via credit card. The support website registerflies.com, which had been set up in 2005 for the purpose of providing independent support and information to disgruntled RegisterFly customers, was providing information on recovering domain names lost by RegisterFly. Also, they have called for domain name registrants to contact the Florida attorney general.

RegisterFly was ordered by ICANN to provide its database of registrant information to them, including the owners of domain names and their contact details. ICANN reportedly received the data on March 7 and found that the data was deficient and inaccurate. On April 17, 2007 A Federal judge granted a temporary restraining order to ICANN compelling Registerfly to turn over all registration data and to update it every seven days.

Because of the current operational problems at the RegisterFly website, ProtectFly in many instances can not be turned off, or turning it off has no effect, which has caused customers more difficulties. Valentino Viccetzar, a writer for the web blog Poker Rouge Blog, was reported to have found a 15-step work-around solution for customers. This technique became known as the 'poker push', but in many instances failed to work, and customers were forced to try and find remedies with Registerfly.

Customers continued to report that they were unable to get support through the Registerfly support system as their telephone support involved multiple hour wait times, support tickets were ignored or deleted, and that emails went unaswered. A few customers were able to resolve problems. However, sometime in the middle of May 2007 the Registerfly support telephone numbers were disconnected.

There is no way for disenfranchised customers to recover funds remaining in their accounts. As of April 2, 2008, customer support states "We do not refund quick checkout balances... This policy is without exception."

Portfolio buyout

On May 29, 2007 Go Daddymarker, announced that through an agreement with RegisterFly, it was taking over the entire portfolio of more than 855,000 generic top-level domain (gTLD) names held by RegisterFly. The names would move to newly created accounts at GoDaddy, and they would notify Registerfly customers by email. GoDaddy and ICANN will not release terms of the agreement but have said that GoDaddy is not buying Registerfly. ICANN plans to continue legal action against Registerfly for its continued noncompliance of the court ordered injunction.

Bankruptcy Hearings

A hearing in Newark, New Jersey in December 2007 discussed that the company would be executing what is known as an “assignment for the benefit of creditors.” This is usually a state-court equivalent to a bankruptcy case in which a companies assets are gathered by a third-party, liquidated, then distributed to the company’s creditors in proportion with companies debt to each of the creditors.

References

  1. ICANN Blog FAQs for RegisterFly customers, April 3, 2007
  2. The Register, Burke Hansen. ICANN sued by irate RegisterFly customer, as class action rumble begins, March 28, 2007
  3. The Register, Burke Hansen. Registerfly on the fly, ICANN on the run, February 19, 2007
  4. The Register, Burke Hansen. Registerfly files suit against ousted CEO, February 22, 2007
  5. Computer Business Review Online, Anger and fear as domain firm slowly implodes, February 21, 2007
  6. Business Week, Steve Hamm, et al. Judge Rules for Ousted Registerfly CEO, March 9, 2007
  7. Computer Business Review Online, Kevin Murphy; Class Action Lawsuit Filed Against RegisterFly and ICANN, March 28, 2007
  8. ICANN.org ICANN public participation site
  9. ICANN.org, ICANN announcement April 17, 2007
  10. ICANN.org, ICANN vs. Registerfly preliminary injunction item 11
  11. RegisterFly.com, Home Page, retrieved 5 September 2007
  12. RegisterFly Reseller Temination F.A.Q.
  13. Computer Business Review Online, Kevin Murphy. Anger and fear as domain firm slowly implodes, February 21, 2007
  14. RegisterFly, RegisterFly Official Reseller Termination FAQ
  15. Malaysia Sun, Brawling RegisterFly partners in fight to the death, February 24, 2007
  16. The Register, Burke Hansen. ICANN rides to the rescue in Registerfly meltdown, February 23, 2007
  17. Ars Technica, Jacqui Cheng Registerfly faces losing ICANN accreditation, February 27, 2007
  18. RegisterFlies News; ACT NOW - Important News Release
  19. RegisterFlies News; Official Registerfly Announcement
  20. Computer Business Review Online, Kevin Murphy. Registrar threatened with ICANN shutdown, February 22, 2007
  21. Malaysia Sun, Alarm bells ringing over domain registrar, RegisterFly.com, February 19, 2007
  22. The Register, Burke Hansen Of ICANN and the Registerfly meltdown, March 3, 2007
  23. The Register, Burke Hansen, Stiffening at last, ICANN threatens Registerfly with legal action, March 4, 2007
  24. Computer Business Review Online, Kevin Murphy, ICANN locks down at-risk Registerfly domains, March 5, 2007
  25. ICANN.org, ICANN announcement, April 27, 2007
  26. RegisterFlies News; Registerfly is DONE - Get Out!
  27. RegisterFlies; RegisterFlies Latest News
  28. RegisterFlies Forum; RegisterFly Update March 10 2007 (whole page)
  29. Web Host Directory - Industry News; Poker Blog Finds Loophole in RegisterFly.com's System-May Save over 1 Million Domains
  30. Registerflies.com forum posts, Registerlies.com forums
  31. Hot Points with Go Daddy CEO Bob Parson
  32. Go Daddy Press release May 29, 2007
  33. ICANN.org ICANN blog May 29, 2007
  34. Associated Press GoDaddy Agrees to Run Domains in Limbo May 29, 2007


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