'Typosquatters' Cash In On Misspelled Domain Names

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October 19, 2000 (8:31 AM EDT)

'Typosquatters' Cash In On Misspelled Domain Names

By Cynthia Flash,

Simple typing errors are turning into big bucks -- and major legal disputes -- for some companies that are trying to capitalize on misspelled domain names.

The practice is called "typosquatting," and it involves registering misspelled names of popular domain names like Yahoo (stock: YHOO), Amazon (stock: AMZN), and Microsoft (stock: MSFT). Companies that register the names direct Web surfers who misspell an Internet address to other sites that make money off of the mistyped names.

For example, a user who types http://www.cbssportline.com will end up at a completely unrelated site, instead of the online sports site he would have hit if he had correctly entered http://www.cbssportsline.com.

The unrelated site sometimes is OTCstreet.com or an OTCstreet property like Freelotto.com or Triviacity.com. OTCstreet offers the surfer the chance to sign up for free financial content, and it shows financial-related banner ads.

The other sites also display ads, as well as offer prizes to surfers who disclose information. The site owner could then tell advertisers that the site gets thousands of unique users, which would generate increased revenue for the site.

In fact, the little known OTCstreet.com in August had more unique visitors than BusinessWeek.com, according to statistics from PC Data.

Typosquatting isn't new. It has been around for about two years and was pioneered by pornography sites to generate traffic. But more consumers are becoming aware of it as the international bodies that govern domain names attempt to crack down on it.

The World Intellectual Property Organization (WIPO) this summer ruled on its first set of typosquatting cases by giving Microsoft, Reuters, General Electric (stock: GE), and Yahoo the rights to dozens of misspelled variations of their domain names.

Although some companies continue to direct traffic to their sites via misspelled domain names, others are facing increasing legal battles over the names.

"It's a little tougher than it used to be, but the smart ones can still make money off of it," said Robert Cumbow, chairman of the intellectual property practice at the Seattle law firm Graham & Dunn.

Cumbow handled one of the first typosquatting cases in 1998, when someone registered the name Amazom.com and directed people to a website that for a time displayed banner ads for Barnes and Noble.

Cumbow advises his clients who feel they're being victimized by typosquatters to first send a cease and desist letter demanding that the owner of the misspelled domain name discontinue using it.

"The truly enterprising typosquatters will concentrate on the domain names that yield them the best return for the least trouble," he said. "If you send the demand letter, a lot of times that alone will convince the typosquatter to let them go."

If that doesn't work, he recommends filing a complaint with WIPO or the Internet Corporation for Assigned Names and Numbers (ICANN).

Sites known for their use of mistyped domain names include Pointcom.com, Powerclick.com, and OTCStreet.com.

In addition to registering misspelled names, like drkop.com and charlesschwaab.com, these sites also generate traffic by registering names that begin with www. If a surfer forgets to type the period between www and wsj to get to the Wall Street Journal, they will end up at Whats4free.com. If they type in wwwmicrosoft.com, they'll end up at OTCstreet.com.

But traffic doesn't always mean success. The owners of Powerclick are in a legal dispute with two former employees, one of whom has taken his story to the FBI.

Dominique Einhorn, Powerclick's chief executive, said the company is no longer involved in typosquatting. And Einhorn, who is also involved with OTCStreet.com, said that site was merely an experiment and will stop using mistyped domain names within a few weeks.

"Before the [WIPO] legislation was passed, our business model was to resell traffic to companies. Now we're not selling it anymore," he said.

Einhorn said he would not fight any WIPO disputes that get filed against him. But that doesn't mean he's giving up all the misspelled domain names he owns.

"In some cases we're going to lose them, in others we're going to retain them and see how it pans out," he said.