Australian, U.S. Consumer Protection Cops Stop Internet Copycat

As many as 13,000 consumers in at least nine countries who were duped by a copycat Internet domain name registry will qualify for refunds under an agreement announced by Australian and U.S. consumer protection agencies. The Federal Trade Commission targeted the Internet domain name scam being operated out of Australia, and alerted Australian Competition and Consumer Commission authorities, who charged the company and its principal with misleading and deceptive conduct. The case has been settled by the ACCC with the establishment of a trust fund, which will return $A250, 000 to victims worldwide and bar the defendant from using the name "Internic."

"This is a excellent example of cross country cooperation to protect consumers," said Robert Pitofsky, Chairman of the FTC. "It sends a clear message that the international consumer protection community is prepared to work together to maintain the Internet as a vital marketplace."

"This settlement indicates the increased cooperation achieved by the ACCC in international competition and consumer law enforcement," said Professor Allan Fels, Chairman of the ACCC. "With the recent signing of an agreement between the United States and Australia to allow the two countries' antitrust organizations to assist each other, I expect more such actions to follow."

Consumers who want to register an Internet domain name -- essentially an Internet "address" -- apply to InterNIC, a service of Network Solutions, which has an exclusive contract with the U.S. government to issue Internet domain names. Many individuals and organizations apply by contacting InterNIC at their Internet address, http://www.internic.net. The cost of registering a name is $100 for two years. Australia-based Internic Technology Pty Ltd and Peter Zmijewski operated a copy-cat Internet site, internic.com, which offered to register domain names for a charge of $250. Consumers searching for the InterNIC site often entered "internic" or "internic.com" on their Web search engine or Web browser, calling up the internic.com Website operated by Internic Technology rather than the internic.net Website run by Network Solutions. As many as 12,000 consumers signed up for their domain names with the Australian-based company, paying $250 instead of $100 for their name. The company would forward the $100 to Network Solutions and pocket the difference.

In 1997, the FTC issued an advisory opinion saying that the copy-cat site may be misleading consumers in violation of federal law. The FTC also referred the matter to the Australian Competition and Consumer Commission, which filed charges in Federal Court in Australia alleging deceptive and misleading conduct. The ACCC charged that consumers who used the copy-cat site were deceived into believing they were using the services provided by InterNic.

The ACCC settlement will establish a compensation trust fund containing $A250,000 (approximately $161,000 U.S.) for consumer redress and bar the Australia-based company from using the internic name. Consumers who registered a domain name at the internic.com site will be e-mailed a notice setting out the procedural requirements for claiming a refund.

Copies of the press releases related to this case are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 202-326-2502. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.