[registrars] Payments for multi year registrations.

[Mark Jeftovic]

Bob, I'm not up to speed on how much of RFly's problems were caused by 
this specifically (a cashflow shortage from pay-as-you-go), as I 
understood it (from having both sides of the company calling me within 
minutes of their domain landing on our nameservers and badmouthing the 
other), the mismanagement went far deeper than that issue alone.

As an aside, I am curious what will be revealed to be RFly's undoing in 
the end because I think right now there is a a kind of cavalier 
under-appreciation for the gravity of this situation and how badly this 
will play out for the rest of us registrars in the future (there *will* 
be calls for things like government intervention, more regulation, the 
elimination of registrars, etc)

We've never been thrilled about this practice (pay-as-you-go) because 
we've been shafted pretty badly by it. In one case a registrant paid 3 
years at another registrar, who remitted to the registry for 1. Customer 
then transferred over to us and started calling *us* demanding to know 
"where my other two years are".

He ended up being a freelancer for the largest English language 
computing magazine in India and wrote one hell of a hatchet job about 
our practice of "stealing years from our registrants". Luckily, the 
magazine's editor was also a customer and didn't run it (since it was 
completely untrue).

That, and episodes like it left a bad taste in our mouth and we ended up 
  automating a mailout to users when they transferred over to us from 
registrars who were known to do this instructing them to check their 
years and if any are missing, to go after the OLD registrar for their 
refunds.

The practical result of pay-as-you-go is that you come out ahead by 
frontloading your marketing process (in itself, not a big deal) but gets 
twisted because a registrar who provides bad service to the point where 
a customer leaves actually comes out ahead if they do so without pushing 
for a refund. They save the registry fee on the subsequent unused years.

-mark

Robert F. Connelly wrote:
> Dear Members:
> 
> Those of us who were on the ill fated "Code of Conduct Task Force" felt that there should be a requirement that registrars taking multi year registrations should pay the registry immediately for the full registration paid for by the registrant.
> 
> Over the years, we have had some vigorous debates over this issue in the RC meetings.  To me, it was analogous  to taking out a "twenty pay year" life insurance policy and paying the broker for the first ten years -- with the broker paying the insurance company a year at a time.
> 
> When we had a run of five and ten year fraudulent registrations a couple of years ago, I was able to see the point of putting through the first year registration and waiting long enough for the chances of a Chargeback to elapse before paying for the full contract.
> 
> I can see two incentives for delaying payments beyond the chargeback issue,  1. building cash flow and 2. the expectation that registry fees would go down with time.  I certainly had expected them to do so.  Those of us in Core thought the six dollar fee to Verisign was very excessive.  
> 
> However, not only have the registry fees *not* gone down (except .net), they have gone up.  In addition, a very hefty ICANN fee has been added.  Registrars holding back on full payments for multi year registrations will be hit with a shortfall at some point.  Since the RegisterFly.com problem, we can all see the risks of building cash flow by such methods.  Some day there will be a day of reckoning.
> 
> Regards, BobC
> 

-- 
Mark Jeftovic <markjr at easydns.com>
Founder & President, easyDNS Technologies Inc.
ph. +1-(416)-535-8672 ext 225
fx. +1-(866) 273-2892