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New Jersey District Judge Peter Sheridan handed down a consent preliminary injunction on March 2nd 2007, preventing Medina from accessing any RegisterFly corporate funds. However, on March 7th 2007 Medina filed an Answer and Counterclaim and managed to prove to the Court that Naruszewicz had not paid for his stock and that Medina was the sole owner of the company. On March 8th 2007 Judge Peter Sheridan handed down a new Order putting Medina back in charge of the hen house.
While the two shareholders fought for control, the company's alleged millions of customers were stuck. In a normal situation, they would be leaving the company in droves. However, their domain names are locked up and their authorization codes are being withheld preventing transfers to alternative registrars. Domain names reaching their expiration date are simply being lost.
Since many of the domains are fully developed Web sites, a large number of customers are losing complete businesses or at the very least, important business tools. Compounding the problem is that many of RegisterFly's customers are managing domains and Web sites on behalf of others. When the domain names are lost in those cases, those doing the managing are often out of a job.
After this went on for some time, ICANN finally began to act on February 21st 2007 by issuing a letter to RegisterFly giving official notice of breach and stating that RegisterFly "may be bankrupt or insolvent." ICANN also admitted in this notice that a number of complaints received by ICANN were not just due to poor management, but relate to allegations of fraud.
Once the situation came to a boil in February ICANN then rushed to point fingers but still did not act. ICANN made public that ICANN's complaints about RegisterFly date back to at least 2005. One of the most frequent complaints was that customers were being overcharged two, three and four times per transaction.
RegisterFly started out as a reseller for eNom, so when the initial complaints came in ICANN ignored them and simply forwarded all the RegisterFly complaints to eNom, but did nothing itself to fulfill ICANN's self proclaimed role as "guardian of the Internet."
While existing customers are up in arms over the loss of control of their intellectual property and their inability to obtain redress, RegisterFly remains open for business, offering its services to new, unsuspecting customers. Despite its registration, renewal, and transfer systems all being dysfunctional, RegisterFly continues to take payments for orders it cannot fulfill.
In the Complaint filed in New Jersey Federal Court, Naruszewicz claimed that because of Medina's mismanagement, RegisterFly.com has forfeited 75,000 domain names owned by victims of this fiasco in January alone due to the registrar's failure to pay registration fees.
Due to the inability of the courts to move swiftly and ICANN having only initiated a potential breach notice, refusing to force the Registrar to comply by court order, it appears that without this Class Action lawsuit the victims are stuck.
Even more disconcerting is that a number of complaints received by ICANN relate to allegations of fraud. In its bombshell letter of February 21st 2007 ICANN attempted to justify its threat to terminate RegisterFly, but in fact laid out the history of ICANN being aware of complaints dating back to at least 2005, and doing nothing to protect the public.
RegisterFly customers who believe the ongoing horrific support issues at their registrar are a recent phenomenon based upon the corporate infighting, have been disturbed to discover that starting as early as 2005 and on into 2006, ICANN was receiving large numbers of complaints that emails and support tickets to RegisterFly were going unanswered and that the call hold time was frequently in excess of 30 minutes and not on a toll free phone number.
If customers had their credit card company reverse any overcharges, ICANN admits that RegisterFly "retaliated by denying the customers access to all of the registered names in their account," not just the names involved in the relevant transactions.
Over a year ago, in January 2006, ICANN told eNom it was receiving an "unusually high number of complaints concerning RegisterFly." eNom responded with an explanation from its reseller RegisterFly, which indicated that RegisterFly intended to move its customer's domain names from eNom to its own account. Incredibly a month later, at the very time ICANN was accrediting RegisterFly, eNom was contacted again and was told its own accreditation was in potential breach as a result of allegations that its reseller RegisterFly was altering customers' "Whois" data and populating the Whois record with "intentionally inaccurate data." eNom was told at the time that any domain registrations through its accreditation, even if processed through RegisterFly, were eNom's responsibility.
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