Is Cybersquatting a big problem?
In short, "yes". Cybersquatters are a growing threat to brands. This trend has accelerated as e-commerce grows and consumers spend more time online. A new report suggests that cyber-squatters are cannier and more cunning than you might imagine.
For brand owners, resolving domain name issues and filing defensive registrations eats up considerable time and effort. But as many have found to their cost, ignoring cybersquatting can lead to consumer confusion, loss of sales, fraud and potentially expensive disputes.
The recent report by the EUIPO Observatory casts some welcome light on the size and nature of the threat from cybersquatters, based on an exhaustive study of domain names that use the names of brands, brands plus keywords and variations such as mis-spellings. It includes detailed case studies of 20 (anonymised) brands from different sectors, and is well worth reading in full (available to download here).
The study analysed a total of about 239 million domain names in 560 generic top-level domains (gTLDs) and 250 country code TLDs (ccTLDs). Of these, over 62 million domain names were classified as suspicious – there was a higher percentage of suspicious domains for fashion-related brands compared to other sectors.
Representative samples of the “suspicious” domains were analysed in more depth: while some were "parked" or not actively used, and others were for sale, many were used for activities including selling counterfeits, scams, phishing or distribution of malware. As the report points out, such illicit activities can be particularly serious for SMEs, which often lack resources to monitor their web presence or file defensive domain name registrations.
Strikingly, the report suggests that cybersquatters are sophisticated, smart and strategic in the way they target consumer brands. For example, it found that they make decisions based on cost-efficiency:
“A clear distinction could be made when comparing the results of lifestyle items, marketed directly to consumers, with specialised products sold to professional users in B2B transactions, particularly in the medical or scientific field.”
The cybersquatters avoid those companies that are more likely to have protective measures in place: “A reasonable inference was that companies selling B2B normally have account managers and salespeople, making the situation less attractive for counterfeiters. The effort required to sell fake designer goods to consumers was minimal beyond buying the initial stock, whereas impersonating a sales agent required much more expertise for, most likely, a lower return.”
The nature and scale of the cybersquatting threat will vary between brands and businesses but this study provides a fascinating insight into the behaviour of cybersquatters and how you can make sure you are equipped to defend your brand against them.