VeriSign Faces Fourth Marketing Lawsuit

Domain name registrar VeriSign’s recent direct marketing campaign continues to land the firm in hot water, as a second competitor joins the legal fray with its own suit.

In its lawsuit, Scottsdale, Ariz.-based Go Daddy Software, a discount domain name registrar, accuses VeriSign of consumer fraud, deceptive advertising and misappropriation of trade secrets. The firm is seeking a temporary restraining order and preliminary injunction against the larger, Mountain View, Calif.-based company.

VeriSign has said that it does not comment on pending legal cases.

The suit stems from a direct marketing campaign launched earlier this year by VeriSign, which Go Daddy said duped its customers into believing their domain names were about to expire, and prompting them to pay VeriSign to take over their domains.

Go Daddy said its customers had been “flooded” by the mailings, which were labeled “Domain Name Expiration Notices” and marked with “Reply By” dates that Go Daddy said bore no relation to users’ actual domain expiration dates.

The lawsuit says the practice harmed users, who originally paid $8.95 per year for their domains via Go Daddy, by misleading them into paying a higher fee to VeriSign, which charges $29 per domain.

“Marketing is one thing. Deception is something else all together,” said Go Daddy President Bob Parsons. “The purpose of this lawsuit is to protect our customers from being misled and victimized by VeriSign’s deceptive campaign.”

The suit is the second filed by a VeriSign competitor in response to the campaign, and the fourth action spawned by the effort to date. Last month, BulkRegister successfully obtained an injunction that forbids VeriSign from sending the mailings to its users.

Later that month, lawyers at the Los Angeles law firm of Weiss & Yourman filed for damages on behalf of consumers, aiming to receive class-action status for the suit. In March, the non-profit California Consumers Action Network filed a similar complaint.

Marketing isn’t the source of VeriSign’s only legal woes, however. The company, like several firms that rode to high valuations on the dot-com bubble, is also facing legal threats from angry shareholders upset over VeriSign’s declining stock price.

Ironically, efforts at improving its business and rallying investor support led directly to VeriSign’s aggressive marketing campaign. Executives announced the campaign in May during the company’s annual investor day, as a way for the firm to recapture market share lost to newer players, such as Go Daddy and BulkRegister.