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Cybercrime in the Market

Many cybersquatters have used these practices in order to build their multi-million dollar business. Cybersquatting is commonly defined as the “bad-faith and abusive registration of distinctive marks as Internet domain names with the intent to profit from the goodwill associated with such marks,”¹⁶ and has led to an entire range of harmful activities that threaten today’s brand owner. Initially, cybersquatting was built on a “ransom” model in which individuals registered names bearing famous trademarks. They then held them ransom in order to drive up the price that the rightful trademark owner was willing to pay in order to get the name back. However, the cybersquatting business model has evolved as trademark owners have become increasingly aggressive in pursuing arbitration and litigation to regain domain names bearing their marks.

Unfortunately, this evolution has further complicated the problems associated with cybersquatting. Cybersquatters have become more nimble and developed tactics that allow them to continue to use distinctive marks via less conspicuous methods. Cybersquatters use the domain names in their portfolios to divert and monetize traffic, create confusion and ultimately profit from the names that bear famous marks through recycled sponsored advertisements on pay-per-click Web sites.

Typosquatting

As mentioned earlier, one of these evolved techniques is typosquatting. Typosquatting is defined as “the practice of registering domain names that are typos of their target domains, which usually host popular Web sites with significant traffic.”¹⁷ Typosquatters take advantage of multiple forms of typing mistakes, including instances when users repeat a letter, switch two letters, or drop letters from domain names. Typosquatters also take advantage of users who enter the wrong TLDs, such as a “.com” instead of a “.org.” Examples of such mistakes include mypsace.com, yotube.com, microsotf.com, and googgle.com. Once typosquatters register these names, they monetize them in predictable fashion, pointing users to pay-per-click advertisements or other content harmful to user opinions of the brand in question. Following this report, FairWinds Partners will release the results of its recent study on typosquatting (part 2 of this series), aimed at gleaning significant trends from typo domain registration. By examining the mistakes that typosquatters most frequently use to create typo domains, we hope to provide brand owners with the information needed to evaluate their exposure to typosquatting and to develop an effective defense against it.

Combosquatting

A second type of abuse is combosquatting, which specifically takes advantage of the practice of Evolved Navigation. As more Internet users are entering creative domain names and expecting relevant content from companies they know and trust, combosquatters are registering domain names that combine a popular brand or typographical variation of a brand with either a generic term associated with that brand, or a specific product or campaign marketed by the brand. One example is “oldnavystores.com.” FairWinds has found that around 49 percent of well-known brand name and keyword combinations receive equal or greater Direct Navigation traffic than search queries. This means roughly half of users looking for brand content are expecting companies to have registered these keyword combinations, especially in the .com extension. This figure clearly shows the potential for harm caused by combosquatting both in terms of monetization and damage caused to brand image. We hope the release of our forthcoming study on combosquatting (part 3 of this series) and our analysis of trends associated with this practice will better inform brand owners of the potential harms posed by combosquatting and provide them with strategies to combat it.

Diversion

Diversion is one of the more harmful business consequences of cybersquatting that occurs once a user has reached a squatted page. Diversion can be viewed broadly as any time a user is directed to content other than that which they had initially intended. However, it is most harmful to brand owners in more specific instances in which a customer’s original search for content related to a specific brand is shifted towards another brand or other misleading content. One can argue that any time a user is directed to a pay-per-click site instead of meaningful brand content, a user has been diverted away from the brand and that brand has been harmed. Nevertheless, diversion in its more specific sense not only directs users to content counter to what they are looking for, but also reminds users of alternative products and services that compete with those of the rightful brand.

It is this type of diversion that is most damaging to brands and consumers alike. For example, in Figure 3, a user looking for Capital One card services and promotions who enters capitalonerewards.com into their browser is immediately redirected to a pay-per-click site with Capital One branding and colors.¹⁸ Instead of finding Capital One, the user is presented with several ads for refinancing and credit card options from Capital One competitors including JPMorgan Chase & Co. and Bank of America Corporation. If the user clicks through the Chase ad and finds that a Chase service will meet the same needs as Capital One and consequently chooses Chase over Capital One, Capital One suffers the immediate loss of a customer. Another unfavorable possibility is that a customer that is diverted to content while looking for another intended brand may assume that the site that they eventually reach is associated with or sponsored by that intended brand. This can be problematic for many reasons. Potential harms range from decreased consumer confidence in the brand to liability in fraud cases such as phishing.

Figure 3: Screen shot of capitalonerewards.com¹⁹ [+]

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