“Brandjackers” profit by setting up bogus websites on domain names used by recognizable brands and posting pay per click advertising links (often to competitor sites, phishing scams or adult content). According to a brandjacking report out this month, cybersquatting jumped up 33% last year. The situation is so bad that companies such as Christian Dior and Gucci employ organizations to help remove bogus Web sites and online auctions. It is estimated that these organizations alone are responsible for removing over $1 million of illegitimate sales each week from online auctions and bogus e-commerce sites.

From a marketing perspective, brandjacking can be very damaging for legitimate enterprises. Not only does it deny them the ability to use that domain, but it can also seriously threaten their online reputations by misleading potential new customers. Just to twist the knife further, the true trademark owners are then held to ransom by the cybersquatters, who then offer to sell the domain back to them at a vastly inflated price.

Historically, brandjackers have targeted well known brand names for lucrative payouts. However, in recent years, following a number of highly-publicized lawsuits and damages sought by brands such as Microsoft and Dell, they have turned their attention to smaller companies who are less likely to consider costly legal action.

However, you don’t need a “big name brand” to beat the brandjackers, as Internet Security specialists SmoothWall have recently proven. For over three years, cybersquatters operated a fake “SmoothWall” site on their Smoothwall.com domain. The site was built to deliberately mislead visitors and it contained links to security related subjects such as network security, firewall software and anonymous surfing that when clicked, led either to competitor sites or adult material.

The fake site:

The real SmoothWall site:

Armed with a recently approved U.S. trademark, SmoothWall began proceedings against the fraudulent domain owner in February 2008 via official arbitrators WIPO (World Intellectual Property Organization). SmoothWall won their appeal in April and the new legitimate version of Smoothwall.com finally went live. CEO Daniel Barron says the process was fast, uncomplicated and surprisingly inexpensive. He urges other victims of brandjacking fight back, “As Internet Security specialists, for us it wasn’t a question of price — but one of principles. There are rules in place to prevent this kind of online abuse and organizations need to take steps to protect their brands.”

Last year, the number of disputes to come before the WIPO rose by 48% to a record number of 2,156 which proves that like SmoothWall, more and more organizations are taking a stand against the squatters. This week the Internet Corporation for Assigned Names and Numbers (ICANN) also cracked down on the burgeoning misuse of domains with stern warnings for registrars. Although they can’t directly target the cybercriminals who use web pages for phishing, propagating malicious software and hijacking brands for profit- what ICANN can do is enforce the registration of their contact details on the WHOIS database. Most cybercriminals aren’t fond of filling in forms and as a result, WHOIS is littered with missing or incomplete contact details for domain name owners. Registrars who fail to follow up these missing details now risk losing their accreditation.

Companies need to be aware of the real threat that brandjackers can pose to their businesses and ensure that they are fully equipped to combat this growing phenomenon should they be targeted. SmoothWall’s experience proves that successfully defending an online brand is much less daunting than it looks and even companies without the financial muscle of large corporations have the brawn to beat the brandjackers.