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January 2, 2003 — (WEB HOST INDUSTRY REVIEW) — The administrators of the .biz domain have agreed to pay out nearly $1.2
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million to settle a class action lawsuit brought against it.
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The lawsuit asserts that NeuLevel, Inc. (neulevel.biz), in conjunction with
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other registrars, became unjustly enriched and violated certain unfair
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competition and consumer protection laws by distributing Internet domain
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names in the .biz registry by a means that constituted an illegal lottery.
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Most of the settlement will go to cover attorneys’ fees, as NeuLevel has
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already sent millions of refunds to customers who paid an average of $5 for
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a chance to win control of desirable names such as “computer.biz” when the
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new domain was opened to the public.
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The scheme was devised to assist NeuLevel handling the large number of
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registration requests. Instead, it prompted a class-action suit disgruntled
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by applicants who said the system amounted to an illegal lottery.
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A California judge agreed with the applicants last autumn, and blocked
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NeuLevel from issuing an estimated 58,000 disputed names.
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NeuLevel subsequently paid $1.7 million in refunds to the majority of
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applicants who were vying for the disputed names and made those domains
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available again without an up-front fee.
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The class-action settlement covers the roughly 25,000 applicants who have
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not yet received refunds. The company will refund a wholesale fee of $2 per
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application to those who applied for names but did not receive them.
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NeuLevel will also pay almost $2 million to cover plaintiffs’ attorney fees.
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NeuLevel, ICANN and the registrar defendants have all denied the allegations
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of wrongdoing and have denied all liability to the plaintiffs and the class
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action litigants.
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NeuLevel is a joint venture between NeuStar, Inc. and Melbourne IT, Ltd.
