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GoDaddy's CEO is claiming scammers are engaging in "Domain Kiting" by abusing ICANN's 5-day "grace period".  According to GoDaddy CEO Parsons, 32 million, or 93%, of April's 35 million new domain registrations were attributable to domain kiting.

Quote:During the month of April 2006, a little more than 35 million domain names were registered. Of these names, 32.7 million were used – most again and again – but never permanently registered. These 32.7 million names were part of a scheme – a growing abuse of the domain system — one I wrote about in my last blog article. It’s an outrageous practice. I used to call it the add/drop scheme. After thinking about it, I think the name “add/drop” sanitizes the practice too much, so I’ve decided to call it something closer to what is actually taking place. The name I’ve decided upon is “domain kiting.”...

In a nutshell, here's how domain kiting works.
Domain kiting registrars put up mini-Web sites — loaded with search engine links — for domains names for which they never pay. When people land on these Web sites and click on the links, money is made. It's easy to spot one of these registrars as the number of total registrations they make often far exceed the number of permanent registrations — or names for which they actually pay. This is why during the month of April 2006, out of 35 million registrations, only a little more than 2 million were permanent or actually purchased...

full article: http://www.bobparsons.com/DomainKiting.html

Parson's first article explaining the problem:

Quote:The add/drop scheme. How millions of .COM names are used but never paid for.
“Add/drop” abuse is everybody’s problem.
We Americans have a big problem – actually it’s everybody’s problem — and it has something in common with the .EU Landrush abuse I just finished writing about – no one wants to talk about it. The problem I’m talking about is abuse of the ADD Grace Period (AGP) by a number of key registrars right here in the good ole U.S.A.

The AGP is a five day window during which a newly registered domain name can be deleted or dropped and the registration fee is then refunded by the Registry. The original intent of the AGP was to provide a mechanism for Registrars and registrants to correct mistakes, reverse fraudulent registrations, etc. That original intent has gone astray - because today the AGP is being misused in a large way. I call it the add/drop scheme...

full article: http://www.bobparsons.com/april2006.html

Some improvement in May  , GoDaddy's CEO says 92.3% of May's domain registrations were due to domain kiting compared to 93% in April.

Quote:Domain kiting continues out of control!
The numbers are now in for May 2006 and the domain kiting problem continues to rage out of control. In fact, it’s as bad as ever.

92.3% of May registrations were kited domains!
Consider this: Just over 35 million names were registered for the month of May. Of those just over 2.7 million were permanent registrations. That means that 92.3% of all domain names registered were part of a scam now known as domain kiting. These names were kept off of the market, they were used to generate search engine revenue – AND BECAUSE OF A LOOPHOLE ICANN REFUSES TO ELIMINATE – those 32.3 million names were used without being paid for.

full article: http://www.bobparsons.com/MayKiting.html

Quote: registrars put up mini-Web sites — loaded with search engine links — for domains names

When people land on these Web sites and click on the links, money is made

Is he describing the millions of GoDaddy parked domain pages that are polluting the search engines?