Over 90% of domain names registered in May were not paid for, according to Bob Parsons, chief executive of pre-IPO registrar GoDaddy.com Inc.
Parsons said on his blog that 92.3% of domains registered in May were kited, the term he has coined to describe a system where domains are registered temporarily, refunded, then re-registered.
That works out to over 30 million domains, or over 60% of the size of the entire .com registry.
Domain kiting, according to Parsons, involves an exploitation of the so-called redemption grace period, a five-day window in which registrars can get refunds for domains that have been registered.
The scam involves rogue registrars registering domains for the five-day period, during which they put up web sites containing cost-per-click advertising.
Refunds are requested, and any domain that has seen traffic and clicks is re-registered for another five days. Even if the scammer is only seeing a few cents per domain, the cost of that revenue is negligible.
While these rogue registrars need to make a substantial deposit with the domain registry, such as VeriSign Inc, they rarely end up paying for these revenue-generating domains, according to Parsons.
In the meantime, none of these domains are available to regular paying registrants, which potentially hurts GoDaddy’s business. The company is the market share leader.