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Domain Renewal Accounting Loophole Exposed in Verisign Registry
September 30th, 2007 by 
Jay Westerdal
Domain owners that pay the renewal fee on their domain after expiration date and then transfer away from their current registrar are getting fleeced out of a year of registration. Under the right conditions and if everything aligns correctly we find that hundreds of transaction each day are being deprived of a paid domain year. I confirmed my finds when I found Pat Kane the Director of Business Operations of Verisign during the ICANN meeting in Lisbon. No registrar that I am aware of proactively provides a refund if the domain owner transfers away within 45 days of the anniversary of the domain creation and renewed after the expiration. I asked a few registrars and Elliot Noss the CEO of Tucows went on the record and said he would provide a refund when this edge case happened at Tucows. Mr. Noss doesn’t believe that many domain owners experience this at his registrar because their transfer policy allows domain owners to transfer out after expiration. At a registrar like Godaddy the edge case may happen a lot, if a registrar blocks the transfer during the grace period until the domain is paid for the case will happen more often.
However a lot of registrars do not allow owners to transfer out after expiration, instead they insist that the owner renew the domain name because it is past expiration, after the renewal they will not block the transfer. But their is a huge problem with this, Verisign refunds the money to the original registrar for the renewal if another registrar transfers the domain away in this window. Verisign implicitly automatically renews every domain that expires, this is why the domain stays alive past expiration, it is up to the current registrar if they want to delete the domain. The only way Verisign knows if a domain owners pays is if the registrar doesn’t delete the domain during the grace period. So if a transfer goes out, Verisign refunds one year to the old registrar, even it you paid for it, it is refunded to the old registrar.
The Verisign accounting system that handles over 75 Million transactions a year has a flaw in it that some registrars may not understand how it works and generally don’t issue a refund when they are issued a refund by Verisign. The special circumstances are as follows: The domain is past expiration, the owner renews the domain at the current registrar, the owner then transfers away with in 45 days of the anniversary of the creation date.
Do not renew your domain at your old registrar during the grace period and then transfer out. Instead, directly transfer out or pay your renewal fee, wait until day 46 after the old expiration and then transfer out. You will loose one year of registration if you pay first then leave.
Verisign could fix the hole by requiring a registrar to send an explicit renewal command, but the command doesn’t exist right now.
According to the Official ICANN FAQ at http://www.icann.org/compliance/faq.html, it says:
My domain name has just expired. Can my registrar require me to pay for a renewal before I can transfer to a new registrar?
No. Your new registrar of choice can initiate a transfer request on an expired domain name once they receive the required authorization from you. Expiration or nonrenewal of a domain name is not a valid reason for denial of a transfer request.
Note that if the registrar has already begun the deletion process on the domain name and its status shows it to be within a 30-day Redemption Grace Period, the name must be .restored. by your current registrar before it can be transferred.
This loophole most likely exists at other registries as well because most registries are modeled around Verisign’s registry. However Verisign has the biggest marketshare of the other registries and so it could be costing consumers millions a year.
UPDATE: Key-Systems.net, an ICANN accredited registrar has been giving refunds to resellers since 2002 with a automated fix they added five years ago. But only to resellers under the RRPproxy and ISPproxy system not to retail customers. So it would seem some registrars know they should give refunds… however not one registrar does give refunds on an automated bases to retail customers.
Richard Lau from RegistrarManager.com also pointed out ICANN posted an advisory about this in 2002. When I personally asked Verisign and a few registrars about this issue not one of them recalled the advisory ( http://www.icann.org/announcements/advisory-06jun02.htm ).
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September 30th, 2007 at 10:43 am
So if your housekeeping is good and/or you renew or transfer away early with your present registrar then this should never be a problem anyway.
Right?
Else, when you play on the edge you might get hurt.
September 30th, 2007 at 11:06 am
Jay,
You said (and I know it’s true) :”…a lot of registrars do not allow owners to transfer out after expiration, instead they insist that the owner renew the domain name because it is past expiration, after the renewal they will not block the transfer.”
But ICAAN’s policy states: “Expiration or nonrenewal of a domain name is not a valid reason for denial of a transfer request.”
So what basis does a Registrar have for denying a transfer after a domain expires (and before Redemption)?
How can such a Registrar policy be fought against?
Thanks.
Patrick
UPDATE BY JAY: A registrar can not block the transfer according to ICANN. So report a registrar that does and also point them to the Official FAQ.
September 30th, 2007 at 12:41 pm
I attempted to transfer two of my domains a couple of weeks before they
expired at domainmonster. I paid for the domains to be renewed at
Hostway. I recieved an email ten days before the redemption period ended,
but at the time I was in Asia and I had paid for the renewal of them both,
so I did not think it would be a problem.
Basically, what has happened is Tucows supplied the wrong auth codes
for both Domains, so the transfer failed. Now, Tucows have told me that
the domains expired on the 3 Mar 07, then they claimed them. However,
it is not recorded in the whois register that these domains ever expired and
the reason for this is probably because, I paid for their re-registration 14
days before their due expiry date and I have reciepts to prove this.
This whole episode has happened because of a mistake made by Tucows
(deliberate, may’be?), and it seems that they are now, profiting from their
own mistakes.
I have sent numerous emails to both Tucows and icann and have yet to
recieve a reply. Is this a scam they have got going, because it is certainly
starting to look that way to me.
UPDATE BY JAY: That doesn’t sound fair to me. I would email Tucows again. If you can’t make any progress let me know and I will be glad to document it and post a blog article on it. I will need the receipt (I will fuzz out any private data). Email me at Jay [at] DomainTools.com
October 1st, 2007 at 5:26 am
Just as they’ve done with everything else, many registrars have modified their TOS agreements that after so many days the domain ownership reverts to them, sometimes in as little as 10 days. It then goes into a “modified” or pseudo redemption period before going to their auction partner. I think just as the whole original drop cycle was trumped by these TOS mods, it’s likely registrar customers have waived their post expiration rights through the TOS agreements. ICANN needs to rule that those rights cannot be waived through TOS modifications AND enforce it. There is no longer consistency in the industry.
The whole renewal and drop process is a mess because registrars make up rules and exceptions as they go without fear of ICANN intervention, because there is little chance of enforcement. The whole Registerfly fiasco proved this out.
October 1st, 2007 at 5:46 am
Basilius - I’m actually surprised by that. I’ve found Tucows, and the people there, quite reputable. I’m fearful there’s some customer service rep with 1,000 emails he’s trying to get to and yours was neglected — no excuse though. If that is at all the case - try an old-school method: FAX THEM: 416-531-5584. Faxes carry a different weight (literally) and may help you get their attention. I imagine Tucows wants to mitigate any blight on our impression of them - which is generally good (I think?).
Anyway - I hope this is some help. Oh, and honey catches more flies than vinegar - though you seem to be wholly attempting diplomacy.
-uz
October 1st, 2007 at 8:20 am
OK. Please clarify if the following violates existing rules:
Initiate transfer on the day the domain comes due from registrar G to registrar O.
Registrar G automatically flagged domain to renew despite explicit instructions to the contrary.
Registrar G prevents transfer because of this.
Registrar G insists (the next day after this becomes apparent) that domain must either be given back into pool after waiting period, or else must renew with Registrar G.
The above actual incident was reported to ICANN but they failed to respond.
Domain owner had no choice but to register with registrar G for another year.
UPDATE BY JAY: Registrar G is violating the transfer policy and the official ICANN FAQ on the matter. But you are a small guy and you are powerless to stop them. Get a lawyer or pay the renewal fee. Only ICANN has the power to change this. They seem to pass rules and registrars write contracts around them. ICANN needs to clearly state registrants can’t opt to give up their rights by doing business with a bad registrar that has a horrible TOS that no one reads.
October 1st, 2007 at 10:02 am
In a situation such as this we would refund the transaction. We haven’t automated our system to look for these cases but if they are brought to our attention by the registrant we do correct the matter.
In dealing with transfer issues for clients I have found many smaller registrars aren’t aware that if the domain transfers away after expiry they receive a credit for the registry autorenewal that was done. Many registrars block transfers after expiry simply because they are misinformed and believe they will be charged for the registry autorenewal that was done. I have found that in most cases we (the gaining registrar) have been able to contact the losing registrar to get the issue resolved. In most cases this can be done by sending them the exact text found on the ICANN site with an explanation of how the system works. In other cases we needed ICANN to confirm what we were saying was in fact correct.
I find having your registrar address the issue will be more successful than trying to address it yourself.
October 1st, 2007 at 10:17 am
A little of 2 years ago I wanted to transfer about 40 domains from 1and1.com to Godaddy.com around the time of renewal and I think something like you wrote about happened to me. I even lost my personal name (dot-com) to a registrar error like this at Register.com and even with proof they didnt wish to help.
Bottom Line: Be very meticulous with your portfolio and where these names are at in terms of registration cycle and parking, etc.. Treat these items with the same care that you’d treat physical items. Thats why that whole domain insurance idea sounds good too.
October 2nd, 2007 at 7:30 am
…non so coma siate giunti al mio numero di fax che, tra l’altro non ho ricevuto… ma, considerando cosa riuscite a fare con i vostri tools, posso immaginarlo! Non credo sia il caso di ricordarvi che questo è agire ai limiti della legalità… ma non è questo il punto! Mi siete simpatici e visto che operate dall’Italia (Napoli e Arezzo)… perchè non essere più trasparenti rendendo il vostro sito “intelleggibile” a tutti? Ovvero, perchè non rendere le vostre offerte e dichiarare la vostra attività in ITALIANO? Mi piacerebbe avere una risposta… il mio indirizzo e-mail lo avete già… essendomi registrato. Saluti, marius