FTC probes VeriSign over slamming claims
"We've been asked by the FTC not to comment on their request for information regarding our marketing activities," a VeriSign spokesperson told ComputerWire. "VeriSign has always taken its responsibility under the law seriously and we will of course cooperate fully with the FTC", Kevin Murphy writes
The probe is believed to center around a direct mail campaign in which "renewal notices" were sent to customers of competing registrars. Two rival registrars, GoDaddy Software Inc and BulkRegister Inc, sued for and won a preliminary injunction two months ago. A couple of class action lawsuits are also outstanding.
These plaintiffs allege the mailshots deceive customers into switching registrar. They say because VeriSign, as registry and registrar, has such a strong brand, even somewhat knowledgeable customers may be persuaded to inadvertently switch their business to VeriSign, which is one of the pricier companies on the market.
These critics refer to the practice as "slamming" in reference to the outlawed long-distance phone company practice of tricking users into switching providers.
According to Reuters, the FTC is also looking into VeriSign's relationship with Atlanta-based web host Interland Inc, on the basis of similar allegations, but VeriSign was unable to confirm this. Interland is a long-time VeriSign domain name reseller.
In March 2000, VeriSign's Network Solutions division, which was then a separate concern, invested $10m in Interland and the companies announced they would expand an older cross-promotional agreement under with VeriSign domain names and e-commerce security products were marketed to small and medium sized hosting customers.