Have you heard of ‘Domain Kiting’? I hadn’t

Bob Parsons (CEO of GoDaddy, a domain registration firm) taught me everything I know about it in “35 million names registered in April. 32 million were part of a kiting scheme. A serious problem gets worse”.

The article is very detailed; a few bits:

All of us are familiar with the illegal practice of check kiting. Quite simply check kiting involves taking advantage of timing and the banking system to generate cash that simply isn’t there. In many ways that is what domain kiting does. Domain kiting takes advantage of timing and the domain name system in an abusive and improper way to generate cash.

Domain kiting registrars put up mini-Web sites — loaded with search engine links — for domains names for which they never pay. When people land on these Web sites and click on the links, money is made. It’s easy to spot one of these registrars as the number of total registrations they make often far exceed the number of permanent registrations — or names for which they actually pay. This is why during the month of April 2006, out of 35 million registrations, only a little more than 2 million were permanent or actually purchased. The vast majority of the rest were part of the domain kiting scheme.

Yowzah! But, you say “so, where is the money made?”. Search, of course.

The short version: kiters set up mini web sites and then advertise these sites any way they can. One way, is through comment spam (which I am constantly fighting on this blog). The spam includes URLs to the mini sites, which get picked up by the search engines. If enough of the same links get picked up, search ranking goes up, the mini-sites show up in results, and you get the drift.

Okay. Now you say, “so what?”. True enough; people searching for something hit the mini site, the site gets paid for advertising, the URL redirects to a real site that might offer the product (or redirects multiple times to God-knows-where). Commerce is satisfied; the purchaser is happy.

However, the kiters abuse the five-day domain registrar refund policy, failing to pay the registrar for the domain. The faux domains get purged sometime after and the kiters do it all over again. Because their costs are low (not quite zero) and can be automated, it’s a profitable venture.

How big a problem is it? Note the numbers in Mr. Parsons’ headline: 35 million registrations, 32 million that were bogus.