100% 5-Day Money-back Guarantee on Domains?

Now, this I didn’t know. An article in Yahoo! News Entrepreneurs – Exploit Loophole in Law to Generate Profits From Free Web Site Names – discusses people taking advantage of a 5-day money back for new domain registrations.

Entrepreneurs have been taking advantage of a five-day grace period to sample millions of domain names, keeping the relative few that might generate advertising revenues and dropping the rest before paying. It’s akin to buying new clothes on a charge card only to return them for a full refund after wearing them to a big party.

The grace period was originally designed to rectify legitimate mistakes, such as registrants mistyping the domain name they are about to buy. But with computer automation and a burgeoning online advertising market, entrepreneurs have turned the return policy into a loophole for generating big bucks.

Experts believe spammers and scam artists are also starting to use the grace period as a source of free, disposable Web addresses.

Interestingly, we’ve been reselling domains for 3 years now and I didn’t know this was going on. Well, we have had instances where we register typo domains or customers changing their minds about their domain name and wanted to switch. We were able to change the domains but there was a $3PHP 176INR 254EUR 3CNY 22 fee for that within the 5-day grace period. Not sure where the 100% money-back guarantee applies.