# Rage4 "Prey-as-you-go" extortioncast DNS business model



## texteditor (Aug 14, 2014)

First, as a preface, let me state that due to being an IWstack customer I have an unlimited Rage4 partner account so this does not affect me at this time.

As many of you know, gbshouse's anycast DNS service Rage4, very popular among and spawned out of the "cheap VPS" community, has always offered a freemium service, offering roughly 250k free queries per month, then charging something like 1 euro per million queries thereafter.

Now, this kind of business model is not at all uncommon, save for two big differences in Rage4's system - first that pre-paying/"crediting" accounts is not possible, only after-billing-period charging is done; and secondly that Rage4 does not 'cut off' free-tier members after their 250k queries. These two, combined, means that Rage4 DNS allows free-tier members' accounts to accrue charges to their account without any certainty of payment.

This is all well and good if Rage4's owners are content with eating whatever losses they might incur by providing more free service than originally promised, but in the second public thread I've seen gbshouse complain about the matter, Rage4 now plans on sending collections agencies after its users.

This seems to be one of the most horribly unethical things I've seen from a hosting company, which is saying something since the hosting industry is awash with scumbags


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## staticsafe (Aug 14, 2014)

Hey,

Have you taken a look at Amazon AWS lately? You will find a similar business model.


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## sv01 (Aug 14, 2014)

It's sad that we need to chase people (including few LET users) for few Euro.

This 


These two, combined, means that Rage4 DNS allows free-tier members' accounts to accrue charges to their account without any certainty of payment.
maybe this is the right time to left


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## puffrfish (Aug 14, 2014)

I'm not so sure pay-as-you-go DNS services are such a good idea. It's important to consider that these kinds of services can be easily abused, especially when there is no way to limit the amount of queries you can be billed for. While you may normally have a low amount of queries, someone who does not like you could rack you up a large bill quite easily.

DDoS attacks can be annoying just by themselves but when they cost you hundreds at your DNS provider it makes it sting even more. I would suggest taking this into consideration when using any pay-as-you-go DNS service. It's not a hypothetical situation either as I know of a couple people it has happened to with the provider unwilling to "forgive" them.


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## staticsafe (Aug 14, 2014)

puffrfish said:


> I'm not so sure pay-as-you-go DNS services are such a good idea. It's important to consider that these kinds of services can be easily abused, especially when there is no way to limit the amount of queries you can be billed for. While you may normally have a low amount of queries, someone who does not like you could rack you up a large bill quite easily.
> 
> DDoS attacks can be annoying just by themselves but when they cost you hundreds at your DNS provider it makes it sting even more. I would suggest taking this into consideration when using any pay-as-you-go DNS service. It's not a hypothetical situation either as I know of a couple people it has happened to with the provider unwilling to "forgive" them.


I'm inclined to agree with this. I'm not a big fan of services like Rage4 and Amazon's Route 53, pay-as-you-go being one of the reasons. There are "nicer" business models for selling authoritative DNS services, take a look at DNSMadeEasy/Dyn.


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## nunim (Aug 14, 2014)

I never liked the pay by query model as there is no way to generate your own reports/track your own queries to know if you're being cheated or not.  You're essentially at the mercy of your provider's billing and you have no way to prove if the queries they're billing you are legitimate or not.


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## Francisco (Aug 14, 2014)

So is it just that people want affordable anycast?

Francisco


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## texteditor (Aug 14, 2014)

I'd like to see more affordable flat-rate anycast providers and/or providers that allow you to credit an account and then have more granular PAYG pricing.

Doing "Freemium" without cutting off heavy free users or asking for a billing method up-front (like AWS) and then going to collection agencies is just shameful though


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## splitice (Aug 14, 2014)

Have you talked to Piotr? He is a nice guy and I am sure you could work something out.

Generally he is also willing to discuss features if there is a demand and a viable use case (we got some done on the API side). Perhaps even a "free-only" (cuttoff at limit) switch or something.


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## GIANT_CRAB (Aug 15, 2014)

Francisco said:


> So is it just that people want affordable anycast?
> 
> 
> Francisco


I'm using free anycast by Cloudflare, does that count?


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## gbshouse (Aug 15, 2014)

Howdy

First of all as stated in LET thread the DNS is just one part of our business. @texteditor please read whole thread (and previous ones [like this http://lowendtalk.com/discussion/10223/unprofessional-business-clients-partners#latest]) and you will see that:

1. "We do not chase small amounts (like 2-3€), I agree that's not worth. But 10-15 customers with unpaid 50€ and more gives you significant amount of money worth taking care of."

2. "It's sad that we need to chase people (including few LET users) for few Euro." was sai partialy in context of this and my previous thread (see #1).

3. Fact: 99.5% of our profit comes from flat fee based business accounts,

4. Fact: beside DNS we operate 2 more services and run software house

5. Fact: most of the business use collection agancies on certain point - I was just looking for suggestions as our current one is not the best

6. Fact: that's true that we do not block the users after they exceed the free usage tier and it's 100% by design. The DNS is most crucial part of Internet ecosystem and it must be up and running

7. "Doing "Freemium" without cutting off heavy free users or asking for a billing method up-front (like AWS) and then going to collection agencies is just shameful though" - I've exaplained why we haven't introduced the creadit card support (it's just to expensive as most of the payment and micro ones). I never said that we plan to go straight to collection agancies so please just stop.

8. *@texteditor I'm not sure how old are you but there is no need to be rude "because @gbshouse is a fucking moron". It's enough to ask why do we stick to this business model and what our numbers are.*


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## AThomasHowe (Aug 15, 2014)

Debt collectors on 50 EUR lol, as if. If you still own the debt and they act for you, they have no power. If you sell the debt to them they will buy it at like 20% or less of it's cost price, meaning that you will recover less than 10 EUR from this whole ordeal. Not worth it and a horrible customer relations nightmare.


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## gbshouse (Aug 15, 2014)

@AThomasHowe - the request for debt collection agencies recommendations was sent from our financial team. I just looked into the numbers and the 50€ is just a filter value. From 12 customers 10 of them owe us more than 500€ and probably they were involved in some illegal activity (our financial team works close with authorities on this issue). Right now we have two options: sell the debt to collection agency or hire local lawyers. In our opinion selling the debt will be more cost efficient.

Guys - we are providing the service to you (even this forum use our DNS service) and I'm sure that all of you (maybe except @texteditor) know that we are not a scam.


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## AThomasHowe (Aug 15, 2014)

500 EUR on purpose and you might be getting somewhere. You do need an off switch and I think if you wanted to try people in court some countries may have a legal issue with you overcharging by 500 EUR on an otherwise free product.

Really it's hard to say without context. If they're stealing from you with malicious intent, go for it... but for all we know, this could be some pissed off guy buying a DNS attack for $5 and costing his enemy 500 EUR in charges.

If you sell the debt be prepared to lose a lot of that money. They will buy the debt for much less so they can make a profit and so they have the option to strike a deal with the person who owes money - "pay xx% of the whole debt and we'll leave you alone".


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## MartinD (Aug 15, 2014)

Not sure you can say it's unethical in all honesty. I mean, if they tell you that you're entitled to 250k queries per month free, then make sure that's all you're getting or monitor the hits. No unexpected bills then.. no?


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## Nyr (Aug 15, 2014)

MartinD said:


> Not sure you can say it's unethical in all honesty. I mean, if they tell you that you're entitled to 250k queries per month free, then make sure that's all you're getting or monitor the hits. No unexpected bills then.. no?


This. If you don't like the terms, don't use the service. It was pretty clear upfront and I'm sure they can do some kind of flat rate if you need to use millions of queries which get up to 500€.


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## puffrfish (Aug 15, 2014)

I think the confusion with Rage4 specifically is because of two things:

- They don't take a payment method upfront, which would help tell the customer that yes, you will be billed after the free usage is up

- Due to the language describing the free service on the site

"with free usage tier of 250 000 requests per month per domain" is not really the best way to put it, when in reality it's "with the first 250,000 requests per month per domain free"

Since they're not requiring a card yet letting you rack up a bill (requiring a card would help the user to understand they are going to be billed for anything after the free usage) as well as not providing a way to limit your queries to stay within the free usage/keep your bill to a reasonable amount in the case of abuse (even Amazon offers this) it is truly an unpleasant way to do business.

Perhaps these people who have "walked" on their bill are those that have experienced some kind of attack or abuse, and never thought they would need to plan for such a large payment to this DNS service. Someone with a legitimate amount of large traffic would be far more likely to have the means to pay and would have no problem paying for such service.

Yes, customers are responsible for being informed and I encourage anyone who has the opportunity to inform someone of the pitfalls of a DNS service with these kinds of billing practices. Especially when they are considering debt collectors to help "fix" their business model.

I would encourage Rage4 to consider the possibility of changing things around to better suit their customers and make sure they are informed of their responsibilities rather than treating them as enemies. Surprise bills for a service the customer thought was free or huge bills for a service they thought was going to be inexpensive is not something that makes a good impression, and to make matters worse I don't think any business would make a good impression asking about debt collection agencies on a public forum.


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## eva2000 (Aug 15, 2014)

@gbshouse not sure if your system already does this, but wouldn't it help to have notification email reminders bi-weekly or something as well as on first log into their control panels when a customer reaches 50%, 75% and 90% of their free 250,000 quota outlining they are near their limits and they will be charged for excesses ?


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## gbshouse (Aug 15, 2014)

@Nyr - yes, we do flat fee based packages, hell we even have unlimited package (Rage4 HT 50) with fixed fee of 50€/domain/month (even for users which generates 11 digit number of request per domain/month)

@eva2000 - we are in the middle of adding such functionality 

@puffrfish - in most cases in situations where the bill is high or unexpected (by accident or as a result of the attack and when there is contact) we work close with our users to resolve the issue for example by increasing the free usage tier or splitting the bill - but in this case we know that there was "conspiracy" and there is no contact possibility


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## eva2000 (Aug 15, 2014)

Nice

add 2 factor authentication login support that links to a registered mobile number and also do push notifications to mobile at preset threshold percentages too


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## staticsafe (Aug 15, 2014)

eva2000 said:


> Nice
> 
> add 2 factor authentication login support that links to a registered mobile number and also do push notifications to mobile at preset threshold percentages too


They already support two factor authentication using TOTP.


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## texteditor (Aug 15, 2014)

gbshouse said:


> Howdy
> 
> First of all as stated in LET thread the DNS is just one part of our business. @texteditor please read whole thread (and previous ones [like this http://lowendtalk.com/discussion/10223/unprofessional-business-clients-partners#latest]) and you will see that:
> 
> ...


Why aren't you shutting off small debtors before they become big debtors instead of complaining about them and giving them the freedom to rack up more debt?



gbshouse said:


> 3. Fact: 99.5% of our profit comes from flat fee based business accounts,
> 
> 4. Fact: beside DNS we operate 2 more services and run software house


I'm willing to bet !00% of the people who "owe" you money have never paid you a dime before, you just refuse to take a stance past going directly to debt collectors after you let the issue worsen.



gbshouse said:


> 5. Fact: most of the business use collection agancies on certain point - I was just looking for suggestions as our current one is not the best


Most businesses that do also check credit reports beforehand and give positive reports back to credit bureaus for good cusomers - you however do no checks but still are opting to use collection agencies (which can negatively hurt one's credit) to go after debtors whose information you do not verify.



gbshouse said:


> 6. Fact: that's true that we do not block the users after they exceed the free usage tier and it's 100% by design. The DNS is most crucial part of Internet ecosystem and it must be up and running


I get this, but if this is your plan you should probably rethink it rather than publicly complaining and then doing nothing after they owe you 2 euros, then again when they owe you 3 euros, then again when some owe you 50 euros.



gbshouse said:


> 7. "Doing "Freemium" without cutting off heavy free users or asking for a billing method up-front (like AWS) and then going to collection agencies is just shameful though" - I've exaplained why we haven't introduced the creadit card support (it's just to expensive as most of the payment and micro ones). I never said that we plan to go straight to collection agancies so please just stop.


This is your choice, but you can't go to collections and put someone at risk of credit ratings damage or dealing with repo men because of the structure of your freemium service.



gbshouse said:


> 8. *@texteditor I'm not sure how old are you but there is no need to be rude "because @gbshouse is a fucking moron". It's enough to ask why do we stick to this business model and what our numbers are.*


Multiple people pointed out all the apparent flaws last time you complained about many LET-ers owing 2-3 euros each in February, and instead of fixing the business model or at least cutting off the serious offenders, you opted to let them rack up tens of Euros in debt to you, and now are planning to go to collections.


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## texteditor (Aug 15, 2014)

If I racked up 100 euros in debt on this account, would you go to debt collectors after I didn't respond to your emails? Literally none of this is verified. Feel free to unfairly knock down someone's credit score because you can't be bothered to make some necessary concessions in your business model


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## Aldryic C'boas (Aug 15, 2014)

I thought you were quoting mtwisatool at first - had to double take and re-read the names.


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## DomainBop (Aug 15, 2014)

texteditor said:


> If I racked up 100 euros in debt on this account, would you go to debt collectors after I didn't respond to your emails? Literally none of this is verified. Feel free to unfairly knock down someone's credit score because you can't be bothered to make some necessary concessions in your business model



The potential liability created by the failure to verify account information far outweighs the amount you could realistically hope to recover if you turned the accounts over to collections.  I'd implement a verification system before I even thought of going the collections route, and then only submit accounts that had been verified.


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## wlanboy (Aug 16, 2014)

Pay-as-you-go models only work if you can set a cost break.

Even Microsoft offers this on Azure services.


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## gbshouse (Aug 16, 2014)

@texteditor - I'm trying to understand what's your problem

Do you have and proof that we chase people for 2-3€? You've made a drama using partial information from one of the threads on LET.

If you do not like our business model do not us our service or invest your time and money and start your own DNS service.

With every number of customers there some small percent of them which will use fake data or try to cheat, and honestly there is nothing we can do only accept it. If you check rage4.com domain registration date you will see that we are pretty mature company and we can analyze business risk etc. As stated earlier we will introduce some additional notifications about usage etc. (our DNS service was built with community and for community and we listen to you) as we prefer to keep thing up and running instead puting specific domain down.

@texteditor - I would expect public apologize for calling me "moron" and suggestion that we do extortions or similar stuff. As I said do not make drama, if you have any concerns feel free to discuss it in civilized way.


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## texteditor (Aug 16, 2014)

I'll gladly give an apology if you can give reasonable answers to questions I've already noted in this thread:

1. What percentage of these non-payers have _any_ payment history at all with you?

2. How do you plan on confirming you were given valid information about your customer when you do not have any kind of payment history from them?

3. Are you aware of the consequences that negative changes to a person's credit score, truthfully or falsely created by a debt-holder, can have on said person in the US?

Your terms of service, billing style, lack of opt-in/opt-out for allowing users to limit themselves to their free queries, and lack of effort towards verifying user information and payment information means that your TOS is wildly unenforceable in the US (and likely most of the other countries your debtors are in, I presume) and you would never, ever stand a chance a of recuperating any of this lost "income" in a small claims court. Going to debt collectors instead, who outside of a few select companies doing large-scale contract work for Fortune 500 companies tend to be shady assholes who do things of questionable legality just to get their commission is somewhere between an ignorant and unethical at best, and illegal, malicious, and greedy at worst.

Personally, I think you are running a great service, but your your handling of and approach to "the business side" has me convinced that you are either a moron or a very greedy person wanting to do illegal things to make a little extra money - I chose to assume you were the former and were simply unaware of the legal unenforceability of your TOS & service implementation, the reality of how "ethical" most debt collection agencies are, and how much credit reporting works in the US.

If you can reasonably answer those questions, or failing that prove that you wouldn't get laughed out of a venue like a small claims court or civil court where your TOS would have to stand up against actual contract law, I will gladly rescind my insult and accusations, apologize, and replace all my posts on the matter with public apologies.


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## Aldryic C'boas (Aug 16, 2014)

gbshouse said:


> With every number of customers there some small percent of them which will use fake data or try to cheat, and honestly there is nothing we can do only accept it.


You do realize that without verifying someone's ID, you could be screwing over an innocent person that never actually had service with you when you try to sell the debt to a creditor?


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## splitice (Aug 16, 2014)

Atleast in Australia Debt Collectors are required by law to have identifying documents. This is usually a signed contract (sometimes digital signature) or in the case of large companies I have seen credit card details used as ID (had dealings with Debt collectors when Origin Energy "lost" a bill and forgot to send its subsequent reminders).


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## gbshouse (Aug 16, 2014)

@texteditor - to answer your questions

_1. What percentage of these non-payers have any payment history at all with you?_

I assume that you are talking about those 10 users which we are "chasing" right now: each of them have at least one month of correct payment history

_2. How do you plan on confirming you were given valid information about your customer when you do not have any kind of payment history from them?_

We have requested and recived the details from their registrar, we have profile change history and the list of IPs used during registration and logging in to our control panel. We have passed those information to authorities which are working on this issue and they've confirmed the names

_3. Are you aware of the consequences that negative changes to a person's credit score, truthfully or falsely created by a debt-holder, can have on said person in the US?_

Yes, of course, and we are aware of potential problems which can be related to false information.

Please note one thing: with regular users which have unpaid invoice we always send at least 3 payment reminders, next our finance team is trying to find alternative emails (very often people use dedicated email addresses for DNS purposes which are rarely checked), phone contact or even social media such as FB or Tweeter. If that fails we send information that domain(s) present on the invoice will be removed from our system within 2-3 days. If the invoice amount is significant we try to contact the person next month.

I hope you will be satisfied with those answers.


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## AThomasHowe (Aug 16, 2014)

That is a lot more sensible than originally made out, yes. I still think you'd save both your users and yourselves a headache though by capping free accounts once they pass the 250k limit, at least for those with unverified payment information. You could even have a switch under payments, "Add credit from this source when I go over my credit balance" or something.

I know at least the clients you say you're talking about here are people abusing your service but I probably wouldn't feel happy paying 50 EUR in overages on an otherwise free service if I was targeted in an attack or something. $10 to someone else could easily cost your clients magnitudes over that in overage charges.

It's not surprising that a low-end priced service pisses people off when they're charged money they're not expecting.


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## texteditor (Aug 16, 2014)

gbshouse said:


> @texteditor - to answer your questions
> 
> _1. What percentage of these non-payers have any payment history at all with you?_
> 
> ...


This is much more sensible than all your previous posts on the matter have made your policy out to be.

I'm sorry for calling you a moron, given that we now know the pursued all have verified information via payment history cross-checked with other contact info. I see nothing unethical about pursuing payments from these users instead of the LET freemium excessive users you've complained about several times before.

That said, given what I've noted above about the faults in the TOS, and the fact that these are b6y your admission two-digit to three-digit dollar amounts we are talking about, there is very little chance that any debt collectors short of the high-commission small outfits that engage in questionably legal tactics will even be interested. Realistically, you are still looking at a very small payout combined with a high chance of getting yourself into legal trouble and bad publicity.

It is your call at the end of the day, but sometimes it's better to cut your losses than get a little revenge.



AThomasHowe said:


> That is a lot more sensible than originally made out, yes. I still think you'd save both your users and yourselves a headache though by capping free accounts once they pass the 250k limit, at least for those with unverified payment information. You could even have a switch under payments, "Add credit from this source when I go over my credit balance" or something.
> 
> I know at least the clients you say you're talking about here are people abusing your service but I probably wouldn't feel happy paying 50 EUR in overages on an otherwise free service if I was targeted in an attack or something. $10 to someone else could easily cost your clients magnitudes over that in overage charges.
> 
> It's not surprising that a low-end priced service pisses people off when they're charged money they're not expecting.


I agree completely, and I still think he's playing a dangerous game


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## gbshouse (Aug 16, 2014)

@texteditor - "LET freemium excessive users you've complained about several times before." - if I do it on LET I do it by purpose, there are few individuals which play a little game with me personally  (like my post on LET in May 2013 which was targeted to "one of LET well known providers").

@AThomasHowe - as stated earlier we are going to add few new features which will improve the usage awareness


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## drmike (Aug 16, 2014)

Solution = fixed rate ranges.  (i.e. 0-250k free, 250-2 million = $__,   2-10 million = $___, etc.)

Require a payment deposit / credit from everyone. Otherwise if you DO NOT, where they exceed 250k in a month, then your DNS shuts off.

Pay as you go for random quantities that can per se be audited at all will end in horror with a big enough subset of customers.


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## Kruno (Aug 16, 2014)

gbshouse said:


> We have requested and recived the details from their registrar, we have profile change history and the list of IPs used during registration and logging in to our control panel. We have passed those information to authorities which are working on this issue and they've confirmed the names


Now that is quite serious. Domain registrar gave you personal details without a court order, and then authorities(what country?) confirmed the names for you. They had to match clients vs IPs from their ISPs. And all that took place without a court order? Because I'm pretty sure nobody in Europe would issue a court order over a few eur or 50eur.  

Who is domain registrar in question, just so I can make sure to never use them?


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## Dylan (Aug 16, 2014)

^

Good point: that is a shocking and most likely illegal breach of privacy. I'm wondering about the country and registrar as well.


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## fm7 (Aug 17, 2014)

Francisco said:


> So is it just that people want affordable anycast?
> 
> 
> Francisco


*HP Cloud DNS* - 75+ edge locations using Anycast (service provided by Akamai).

$0.35 per domain per month. $0.55 per million queries/month for the first billion queries (the query prices are prorated. e.g. domain with 1.1 million queries would be charged $0.605 cents).

http://www.hpcloud.com/products-services/dns


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## wlanboy (Aug 17, 2014)

Dylan said:


> ^
> 
> Good point: that is a shocking and most likely illegal breach of privacy. I'm wondering about the country and registrar as well.


Me too - he should stop talking...

Which registrar would return private whois information on the behalf of "he/she owes me 5 bucks"?



fm7 said:


> *HP Cloud DNS* - 75+ edge locations using Anycast (service provided by Akamai).
> 
> $0.35 per domain per month. $0.55 per million queries/month for the first billion queries (the query prices are prorated. e.g. domain with 1.1 million queries would be charged $0.605 cents).
> 
> http://www.hpcloud.com/products-services/dns


Good finding.


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