Impact of cybersquatting on businesses

The general idea to squatting is unlawfully occupying an abandoned or unoccupied area of land, space or building. When it comes to intellectual property, business owners may face challenges in the forms of trade mark squatting and cybersquatting. Trade mark squatting refers to the act of registering someone else’s trade mark with the ill intention to profit from such registration. In the cyberspace, cybersquatting refers to the bad faith practice of registering identical or similar domain names to profit from existing trade names/ brand names. Cybersquatting can also be a form of trade mark infringement when the domain name incorporates a trade mark. 

The damage of cybersquatting to businesses can have a huge impact. In most cases, cybersquatters demand exorbitant prices (compared to the usual costs of registering domain names which is relatively inexpensive) before selling the domain names to businesses. In some other cases, malicious cybersquatters register the domain names and set up websites for illicit purposes, including infecting users with various types of viruses and malware, or running phishing scams.  

Phishing attacks, identity theft, damage to brand image/ reputation and financial losses are some further consequences of cybersquatting. The public may be misled into purchasing goods and/or services offered on websites operated by cybersquatters under identical/ similar domain names, thinking that these websites belong to legitimate businesses. This in turn results in loss of revenue and profits suffered by the said businesses. Users infected with viruses and malware can fall victim to phishing scams on these websites may also associate negative experiences with the legitimate businesses.  It is therefore vital for businesses to stay alert and prevent cybersquatters from taking advantage of domain names important to them.