Well-known companies such as Dell Inc., Yahoo Inc. and Marriott International Inc. are lobbying Congress for tougher laws targeting online scammers who profit from their brand names.
United as the Coalition Against Domain Name Abuse, 10 companies have hired the law firm Alston and Bird LLP to persuade federal lawmakers of the need to crack down against those who claim Web addresses, or domain names, that include — or even resemble — a legitimate company's trademark.
The coalition estimates that so-called cybersquatting costs companies worldwide more than $1 billion annually in diverted customer sales and enforcement expenses.
In the past, Internet speculators claimed famous-sounding or popular domain names in the hopes of selling them to corporations for thousands or millions of dollars. They also purchased Web domain names that sounded like a popular company as a way to quickly generate traffic and sell online advertising.
But the coalition says scammers increasingly employ cybersquatting to sell counterfeit goods, secretly install malicious software on computers or dupe customers into providing personal data through, hurting both companies and their customers.
Cybersquatting enables "phishing" scams, said Paul Martino, a former counsel to the Senate Commerce Committee from 2001 to 2005 on Internet issues and now a lobbyist for the coalition.
Phishers attempt to lure Internet users via e-mails to counterfeit Web sites disguised as trusted companies in order to get sensitive data, such as credit cards.
"The bigger the brand name, the more lucrative it is to cybersquat the brand," Martino said.
Both the Federal Trade Commission and the FBI's cyber division said that under existing laws cybersquatting, in and of itself, is not necessarily a crime.
"If the intent of the (Web) site is to defraud or to commit some other illegal act, then it's a crime and we can possibly step in," FBI spokeswoman Cathy Milhoan said.
Dell says it sees 500 new infringements of its brand name each month. Citing a report by MarkMonitor, a brand-protection firm, the group said cybersquatting grew by 248 percent in the past year.
Fighting cybersquatting has become more difficult, companies said.
Many scammers now use automated technology to buy a domain name, test its profitability and then drop it for a refund within an accepted 5-day grace period, tactics referred to as "tasting" and "kiting."
About 2 million domain names daily are tasted and kited this way by exploiting the grace period, originally designed to rectify legitimate mistakes such as mistyping a domain name.
Susan Crane, Wyndham Worldwide Corp.'s group vice president of intellectual property, said this makes it almost impossible to find the true identities of cybersquatters, who also provide false information on registration forms.
"You can never catch who has it because the ball keeps bouncing around," she said.
However, a fear among domain name holders who use their sites for legitimate purposes is that deep-pocketed corporations could unfairly target them as cybersquatters and try to take away their Web addresses.
Josh Bourne, the coalition's president, said a 1999 federal consumer protection law against cybersquatting isn't deterring the practice and civil penalties — which now range from $1,000 to $100,000 — aren't enough, he added.
He said the 5-day grace period should also be eliminated, which would require the Internet Corporation for Assigned Names and Numbers, the Internet's key oversight agency, to change its policy. The group will also seek an international treaty on cybersquatting..
Bourne would not divulge the group's budget or how much they plan spend lobbying, but said: "Money isn't an issue."
In addition to Martino, the firm's other registered lobbyists include Naotaka Matsukata, who was director of policy planning for former U.S. Trade Representative Robert Zoellick and Eric Shimp, who handled trade and investment issues also at the U.S. Trade Representative's office.
The coalition's members also include: Verizon Communications Inc., Hilton Hotels Corp., American International Group Inc., HSBC Holdings Plc., Eli Lilly & Co. and Swiss-based Compagnie Financiere Richemont SA, which makes Cartier jewelry.