What is Cybersquatting?

By Kevin Quia  |  Apr 25, 2022

Cybersquatting is a digital term for actions taken to start a website using a name that should legally or ethically belong to another organization or entity. Cybersquatters have to work a little harder today, but they’re still out there.

Let’s start with a brief history of the shady act of cybersquatting.

How Cybersquatting Came to Be

In the early days of the internet, not all brands were equally eager to embrace the technology and bring their organizations online. That left an opening for sketchy characters to grab valuable domain names and establish websites for just a few bucks per site.

Domain names usually reflect the names of the corporations or entities behind them. They’re Google.com, Wikipedia.org, and WellsFargo.com, just to name a few.

Now here are the names of three more domains: Panasonic.com, Hertz.com, and Avon.com.

They sound familiar, don’t they? But they weren’t owned by those companies back then. Those early sites were the property of parties who were more than willing to sell the domain names to the companies that would seem like the proper owners. And what’s a few hundred thousand or a few million bucks to a multi-billion-dollar corporation?

So blackmail is a leading motivation for cybersquatters. “Pay us money and we’ll give you what’s rightfully yours.” But there are other “bad faith” reasons as well.

In some cases, the squatter wants you to think that you’re at a legitimate website so that you’ll buy inferior products. Or they want you to pick up a computer virus at their shady site so they can steal your personal information or otherwise cause trouble.

The Authorities Ride to the Rescue

Whatever the motivation of cybersquatters, legislators soon realized the activity had to be addressed. The U.S. federal law known as the Anti-Cybersquatting Consumer Protection Act, or ACPA, was passed in 1999 with a goal of assuring that the proper trademark holders had access to their own logical domain names.

ICANN, the Internet Corporation of Assigned Names and Numbers, also took notice. Doing pretty much what its name suggests, ICANN is the entity that grants applicants domain names.

Organizations that feel victimized by cybersquatters have the option of bringing lawsuits under the ACPA, which takes lawyers and time. Or they can bring their complaint to the attention of ICANN, whose arbitration system can take swifter action by simply reassigning the domain name to the proper party. No lawyers or court cases are necessary.

When Squatting Ain’t Squatting

Think of cybersquatting as being the act of rudely (and illegally) cutting in line ahead of those who have more of a right to be at the front of that line.

But what if you got there first? What if you were the one who established the line in the first place? A line to a destination that no one had even thought of going to before the line got started? And what if others were then eager to legally buy their way ahead of you in that new and suddenly popular line?

That’s the definition of domain investing. Sometimes it’s a strategic decision. You might detect a cultural trend, a catchphrase, or a neglected niche market and a domain name that would fit it perfectly.

Or, you could become a wildly successful domain name investor basically by accident. Take the founder of the website Tesla.com.

For years, the car company was known online as TeslaMotor.com. Those who instead went to Tesla.com found a site dedicated to the memory of the inventor Nikola Tesla.

That’s because a Silicon Valley computer engineer names Stu Grossman was a big admirer of the Edison rival, and he started his site in 1992. Years before that other Tesla was even incorporated.

The site wasn’t the least bit misleading. It really was all about the original owner of the name. And Grossman certainly hadn’t squatted on the trademark that hadn’t even existed when he registered his site. But the problem for the automaker was that most people called the company “Tesla” rather than using its longer name, Tesla Motor or Motors. And that’s how they looked for the company online.

The logical solution was for the carmaker to be identified online by the shorter name, and so that’s what happened. The car company bought Grossman’s domain name for $11 million. Making it a helluva investment by someone who went to the head of his own line, not someone else’s.

That’s the difference between domain name investing and cybersquatting: getting there first to a place where others want to be. Legally and ethically.

We’ll Show You How to Legally Profit by Your Domain Names (and no Cybersquatting)

At Aftermarket.com, domain name brokering is our sole business. We help investors buy and sell domain names and develop winning strategies for such investments.

Drop us a line here or send us an email at info@aftermarket.com. You’ll find us to be knowledgeable, responsive, and a great partner to work with.