There is no end to the games played by bad guys and big companies alike at the expense of consumers and small businesses. You may run into the latest shenanigans if you try to register a domain name. The system is rigged.

“Domain kiting” has been widespread for a couple of years. In what seemed like a good idea at the time, domain registrars are required to have a grace period of five days after a new name is registered; no payment for the name is ever made if the name is “returned” during the grace period. Shell corporations have been set up to register names by the millions, stick them onto a server with some ads, and see if they draw any traffic. At the end of five days, the names are returned. GoDaddy’s CEO wrote a nice explanation of the practice, alleging that of the 35 million domain names registered in April 2006, 32 million were part of kiting schemes.

It still goes on. Dell sued a group of registrars in November, alleging that they were actually shell corporations sitting on squatted domain names for free; one corporation would register domain names, use them for five days and return them, and have another corporation immediately register them again – getting the benefit of the Internet traffic without ever paying for the name. Dell’s lawsuit concerns a blizzard of web sites based on typographical errors with Dell’s name – “dellfinacncialservices.com,” for example.

“Frontrunning” is a related problem. You go to a registrar’s web site and do a WHOIS search for a domain name to see if it’s available. The search is revealed to scammers who immediately register the name; when you attempt to register the name, it’s unavailable unless you purchase it from the scammers. (The same scammers run software to register names within milliseconds after they expire and are released by the registrars; if you let a domain name expire, it is likely to be a painful and expensive exercise to recover it.)

Now Network Solutions has been caught doing its own frontrunning. At one time Network Solutions had an effective monopoly on domain registrations, which it lost in part because it was the most annoying company in the world – aggressively anti-consumer, deceitful, obnoxious. (Here’s one of my old rants about sleazy sales tactics, and another about one of its hellishly confusing “upgrades.”) Nonetheless, it’s still one of the best-known registrars in the business and its WHOIS tool is widely used by people who believe Network Solutions will at least be above the level of the criminals.

Beginning last week, if you search for a domain name with Network Solutions WHOIS tool, the company automatically and immediately registers the name to itself. If you then attempt to register the name with another registrar, it will report that the name is taken. The only way to obtain the name is to register with Network Solutions – whose prices are far higher than all the leading alternatives.

It’s essentially a phishing scam to get you to surrender a valuable piece of information – your interest in a name or trademark – that it can then hijack. When this news swept across the online communities, Network Solutions brazenly admitted that it was squatting on searched names for four days and asserted that it was really all about protecting the “opportunity” for a customer to register with Network Solutions. This is, of course, horseshit.

It’s worse than it appears. You can’t wait four days and register the name with your registrar of choice. When Network Solutions releases the name from its four day hold, the scammers will likely register it themselves. If you don’t register with Network Solutions, there’s a good chance that you won’t get the name.

This is getting lots of attention online – influential publication eWeek reported it a few days ago, here’s a particularly thorough editorial, and bloggers are jumping on here and here and here and many more places. The unanimous feeling is that it’s an unforgivable breach of trust. Network Solutions will back off the plan quickly but one can only hope that this helps tarnish its reputation even further, increasing the chance that on some happy day perhaps Network Solutions might disappear once and for all.