VeriSign Faces New Aggressive Marketing Lawsuit

VeriSign is in the line of fire once more as a class action lawsuit alleges the Mountain View, Calif.-based Internet domain name registrar harmed consumers with unsavory, aggressive advertising ploys that pushed its services.

The suit, filed last week in Los Angeles Supreme Court by local law firm Weiss & Yourman, charges that VeriSign sent direct mail to the customers of competing registrars that falsely implied that their domain names were about to expire — and that they must pay $29 to have their domain name transferred to VeriSign.

“On or about April 25, 2002, Verisign began sending a ‘Domain Name Expiration Notice’ to thousands of consumers of its competitors,” the lawsuit maintained. “The ‘Domain Name Expiration Notice’ carried an artificial ‘deadline’ for reply of May 15, 2002, and thereby has implied that certain domain names of targeted potential costumers are about to expire. In fact, there is no necessary relation between the reply deadline noted in the ‘Domain Name Expiration Notice’ and the actual expiration date of the domain name.”

The suit charges that, because of the expense of unnecessarily changing domain name registrars, the campaign will cause “irreparable damage unless VeriSign is enjoined from continuing their unconscionable and deceptive advertising campaign of sending out these ‘renewal’ notices that seek to trick domain-name owners into unwittingly transferring their accounts to VeriSign.”

The new charges come a week after rival service BulkRegister obtained an injunction that forbids VeriSign from sending such mailings to its customers.

Spokespeople from VeriSign did not return requests for comment on the newest suit, though the firm has told that it is complying with the earlier injunction.

That injunction follows VeriSign’s annual investor day conference earlier this month, during which executives announced the campaign and talked up the company’s “aggressive” efforts to win customers from rivals and “to become a competitor and cease being the prey of our other competitors,” said Champ Mitchell, the firm’s executive vice president of mass markets.

“We’ve started a transfer program where, for the first time, we’ve gone out and done to others what has been done to us,” Mitchell said. “For a long time we just laid there and let everybody take our base away. Those days are over and they will not return.”

VeriSign’s renewed focus on customer acquisition comes as the firm is under pressure from the continuing downturn in the domain name sales market. The company’s stock price took an especially hard hit in April after posting lower-than expected first-quarter revenues, which prompted the firm to announce layoff plans.

In April, VeriSign also said its total registered domain names fell further by 12 percent to 12 million at the end of the first quarter, and that domain name renewal rates dropped from 54 percent to 40 percent during the quarter.

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