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Web-Name Expansion Should Be Reduced to Avoid Fraud, FTC Says

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Dec. 16 (Bloomberg) -- A plan to add hundreds of Internet domain names beyond .com and .org should be scaled back to avoid fraud, the Federal Trade Commission said.

The FTC said in a letter today to the Internet Corporation for Assigned Names and Numbers, the non-profit that manages the Web’s address system, the project may create “dramatically increased opportunity for consumer fraud.” Icann should introduce the expansion as a pilot program and reduce the number of domains created, the agency said.

Icann, working under a U.S. Commerce Department contract, approved a plan in June to expand the number of top-level domains beyond the commonly used .com, .net and .org in a move to spur online innovation.

The group, based in Marina del Rey, California, will start accepting applications for Web suffixes including company and brand names, cities and words like .apple and .book, starting Jan. 12 for three months. Applications will cost $185,000 for each domain.

General Electric Co., Johnson & Johnson and Coca-Cola Co. are among more than 40 companies that last month joined with the Association of National Advertisers to oppose the expansion, saying it will increase costs for companies, confuse customers and create new risks of Internet fraud.

Federal Trade Commission Chairman Jon Leibowitz said last week the planned addition of top-level domains may be a “disaster,” allowing con artists to set up fraudulent websites. The FTC, which has no direct authority over Icann, can act when companies engage in deceptive trade practices.

The domain-name expansion has also drawn scrutiny from lawmakers. Jay Rockefeller, a West Virginia Democrat who leads the Senate’s commerce committee, said at a hearing last week that Icann should proceed slowly with the program, given the potential for fraud and consumer confusion.

To contact the reporter on this story: Eric Engleman in Washington at eengleman1@bloomberg.net

To contact the editor responsible for this story: Steve Walsh at swalsh@bloomberg.net

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