Updated Colin McDermott was surprised this week to receive an invoice from the UK’s largest domain name registrar, 123-Reg, auto-billing him £11.99 for a domain name he never ordered.
He wasn’t alone: Gavin Owen opened a live-chat with the company’s representatives after receiving a similar invoice for a domain name he didn’t want. While he was trying to sort it out, he received another invoice for a different name – that he also didn’t want and also had never ordered.
Likewise Simon Hutton: “Just had 2 renewals that I nearly paid but noticed they were .uk and not my existing .co.uk. I never purchased .uk so 'renewal' is very misleading,” he complained on Twitter. “Now not sure if this is a scam…”
It wasn’t just 123-Reg either, another big registrar, NamesCo was doing the exact same thing: sending invoices to customers for names they had never requested. Heather Nixon was confused: “I received an email about a .UK renewal, do I have to renew it? If I choose not to, will it affect my .co.uk?” she asked the company.
“Madness,” Colin McDermott tweeted after finding someone else complaining about the same problem online. “Call the Trading Standards helpline... building up a case against 123-Reg for demanding payment on unsolicited goods.”
Scam? Well, an approved scam
These are just some of the thousands of UK domain holders who will soon be charged millions of pounds for domain names they never ordered and in many cases do not want. So is it a scam? And if not, what on earth is going on?
The short answer is that, yes, it is a scam of sorts. But one that is wholeheartedly approved by the organization that is supposed to oversee the UK’s internet space, Nominet. Nominet pushed for the creation of new .uk domains over two years ago, despite strong objections from the internet community. It stands to make millions a year from the scheme.
But how it is possible for a company to charge for something a customer never ordered? Well, that is thanks to the contortions that Nominet introduced in order to get its plan to introduce .uk domains (as opposed to the previous third-level .co.uk, .org.uk and .me.uk domains) approved in the first place.
Nominet decided it wanted to scrap its long-standing third-level domain approach and offer straight .uk domains back in 2013, in large part because overall .uk registrations were slowing and there was greater market competition from hundreds of new internet extensions.
Not everyone was convinced it was a good idea: adding .uk domains would undermine the existing system for no good reason, critics warned. People were happy with their .co.uk names. But Nominet’s executives, seeing an opportunity to bring in millions of pounds of new revenue every year (and boost their performance related bonuses), pushed ahead regardless.
Opposition to the plans meant it couldn’t get past a vote, however, mostly because of the concern that millions of companies (there are over 13 million UK domains) could have the .uk version of their existing .co.uk name registered by someone else, creating a massive cybersquatting and branding problem. And so Nominet pushed through a policy compromise: anyone with a .co.uk domain would be allowed to claim the same name as a .uk address for two years, for free.
Money, money, money
And the fudge worked: the people that Nominet needed to vote for the proposal – the registrars that make money from selling .uk domains – withdrew their objections and the plan passed. Nominet’s revenue jumped. In 2014, the last year prior to new .uk domains, Nominet took in £28m and made a £508,000 profit; in 2019, that has jumped to £43m and a profit of £5.4m.
The staff and management have also directly benefited: in 2014, the average salary across its 156 staff was £51,900; in 2019 that has jumped to £71,000 on average for 202 staff: a 37 per cent increase. The company’s board of directors – which has been expanded to include senior staff – enjoyed an even bigger boost when directors’ salaries jumped 51.7 per cent from 2014 to 2019.
While all this was going on, Nominet also abandoned its charitable trust, keeping the £10m it had previously given to good causes in its own pockets. It then spent that money on trying to enter new markets – including muscling in on markets by offering contracts on which it actually lost money. At the same time, the organisation started hiding the details of its Board meetings and stopped requiring its directors to file conflict of interests statements.
But there was another problem: despite Nominet enjoying the huge additional revenues from .uk domains, and registrars being happy about selling millions more domains, lots of .co.uk domain holders didn’t actually want a .uk domain.
And so two of the biggest registrars – 123-Reg and NamesCo – decided to automatically register a corresponding .uk domain for each customer's .co.uk domain, without asking, for free, and added the .uk domains to people's accounts.
No harm done. Now pay up
Since no one was being charged money, no harm was done, the companies – and Nominet – reasoned. Many customers did not agree with one calling the “free” automatic registration a “cynical attempt to both raise the rate of registration, and make money from the inevitable raft of auto-renewals from those who don’t realise this is happening.”
Well, guess what? It’s two years later and 123-Reg and NamesCo now have to start paying Nominet for the domains they so kindly registered for free. But, rather than seek to persuade their customers why they should pay for two .uk domains instead of one, 123-Reg, at least, simply stuck those domains on auto-renew. NamesCo, meanwhile, left it to customers to remove their .uk domains from their accounts.
That means that, unless punters notice and actively stop the renewals from going ahead, they will be charged for both their .co.uk domains and the corresponding .uk domains, even if they have never used and will never use the second name.
Nominet stands to make bank from this scheme but as an organization that has gone to great pains to stress its “public benefit” mission, surely it will stand up for .uk domain holders and tell 123-Reg and NamesCo this practice is unacceptable, and that the pair must get their customers' explicit consent before charging them for new names?
Don’t hold your breath. Because two of Nominet’s Board members are Kelly Salter and James Bladel who work for, you guessed it, NamesCo and 123-reg parent GoDaddy, respectively.
Nominet's sorry story
This is far from the first time that Nominet has been accused of feathering its own nest, and that of its Board members’. In June this year, we pointed out how Nominet’s new registration program for .uk domains that had gone unclaimed (yes those unwanted .uk domains again) has not only been purposefully skewed to benefit registrars over UK consumers, but also designed to disproportionately benefit the largest registrars.
Remember the Nominet £100m dot-uk windfall it claims doesn't exist? Well, it's already begunREAD MORE
“UK's internet registry prepares a £100m windfall for its board members – and everyone else will pay for it,” is how we summarized the scheme. That sparked a response from Nominet’s CEO Russell Haworth in which he accused us of writing “fake news.” Haworth didn’t answer our questions, didn’t offer an interview, and – as we pointed out – actually confirmed everything we had written while attempting to hide behind Trumpian bluster.
Not only that but having failed to rein in 123-Reg and NamesCo back in 2014, another registrar – Fasthosts – decided to do the exact same thing and register domains under people’s names without asking for their permission. Those auto-renewal notices will cause the same problem as this week, but aren't due until next June.
And just in case you were in any doubt over just how much of a money-making deal the whole process has been, Nominet has announced that after years of giving .uk names away for free in order to artificially boost .uk registration numbers, it is now offering a special one-year registration of .uk domains for just £2 (as opposed to the wholesale price of £3.75).
So 123-Reg and NamesCo customers are going to get screwed over twice: once for being pushed into buying a domain they never said they wanted, and second, for paying a higher price that the registrars would charge otherwise.
Maybe it is time to call Trading Standards. ®
Updated to add
NamesCo has been in touch to stress the .uk domains it added to people's accounts are not set to auto-renew. The biz admits, though, it added .uk namesakes to their customers' accounts without their permission, and claims it contacted punters at the time to give them an option to "remove free .uk orders from their account before any registrations took place." It also admits it repeatedly emailed customers it registered .uk domains for, prodding them to renew the possibly unwanted .uk domains. However, it argues, it will not automatically charge them unless they agree to renew the domains.
The emails themselves appear to cause confusion, as both the .uk and .co.uk names are bundled together, presumably in the hope that customers will simply click renew, we note.
A spokesperson for NamesCo told us:
All names.co.uk customers were contacted at the time when corresponding .uk domain names were made available to them for free. We built a simple customer experience that enabled customers to remove free .uk orders from their account before any registrations took place, thus providing them with the opportunity to remove unwanted domain names. We sent multiple communications to customers letting them know we had .uk orders to their account for free, but that they could simply delete these orders before we registered any domains on their behalf.
"names.co.uk has not set free .uk orders to auto renew," the PR continued. "Customers are therefore fully in control of the payment process and must proactively decide to take action in order to renew these free .uk domains. In addition, names.co.uk has set a specific reduced two-year domain renewal price for these domains, reflecting the fact that Nominet has provided a price incentive."
Meanwhile, 123-Reg has told The Register this was all just a big misunderstanding. "Customers who thought they were being charged were unfortunately given wrong information, and GoDaddy sent them an email last week to clarify this," the biz explained, setting out an entirely plausible version of events.
"Our policy remains that if a customer hasn’t explicitly opted-in and activated their .uk domain name, they will not be charged," the 123-Reg spokesperson continued. “If a customer does not want a .UK domain name but has been charged, we would encourage them to get in touch, as they will be refunded. We apologise to customers if they have experienced this issue.”
Round two with 123-Reg: a spokesperson now tells no one was charged for a .uk domain unless they specifically opted into renewing the domain, contrary to an email sent to punters. Also, 123-Reg parent GoDaddy did not send out any messages, we're told, contrary to the above statement: it was purely handled by 123-Reg, the Brit registrar has stressed.
"Some customers received an erroneous email last week which stated that these domains would be automatically renewed and we would attempt to take payment," the PR told us after we published the above update. "This is not the case and we have contacted customers again to apologize for this confusion and clarify they will not be charged.”
El Reg will update this story as and when 123-Reg changes its tune again.