Domain Kiting

What is ‘domain kiting’?
In ‘domain kiting’ a registrar – or its PSEUDO client! – registers a domain and puts 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. A registrar who participates in this scheme makes a large deposit at a registry. Then the registrar registers as many domain names as the deposit will allow. For example, if the registrar makes a $60,000 deposit at VeriSign Registry, they could register 10,000 .COM domain names as .COM names cost $6.00 per year. For each domain name registered, the domain kiting registrar puts up a simple Web site filled with search engine links and hopes users land on that page and click on the links. Anytime an Internet user lands on one of their mini-Web sites and clicks on one of the links, money is made.
After a domain name is registered, a registrar has five days to cancel a domain name registration – i.e. drop the name – and get their money back. Domain kiting registrars abuse this rule and cancel the lion’s share of the names they register just before the five day period expires – so they get their money back. But then something unexpected happens. After names are cancelled or dropped, the domain kiting registrar goes out and immediately registers the same names again. The domain kiting registrar will then put the same simple Web site back up for each domain name, wait another five days and then cancel all the names again — just in time to get a full refund. And for most names caught up in the domain kiting scheme, this process will repeat itself over and over and over.
By not actually paying for the names they are using, domain kiting registrars are able to generate profits, even if their mini-Web sites only generate 50 cents or more per year. And if they find, over time, that certain names never generate any revenue they stop registering them altogether. It’s only the names that have value – to you as an Internet user – they register over and over and keep off the market – names for which they of course never pay.
There are those cases when, if a domain name proves to be especially profitable, domain kiting registrars will actually step up and register the name. They’re not stupid. They won’t take a chance on losing a name that generates much more than the annual cost of a registration. However, this is clearly the exception.