More than 50 domain names belonging to small businesses and private individuals were cut off after registration firm DotRegistrar decided to suspend domains registered on their behalf by ISP Liberty Broadband.
The incident has highlighted concerns over the lack of effective regulation of domain name registration companies, and the inability of Internet regulatory body Icann to intervene in disputes with registration firms.
Nick Brown, head of IT at a small clinical research firm which uses Liberty's broadband services, told Computer Weekly that he was shocked by DotRegistrar's behaviour, which left customers unable to contact his firm online.
"This has potentially had a big impact on our business. At least customers who have had bounced e-mails have tried to contact us by phone. But what impact will it have on the image of our company?" he said.
"The thing that horrifies me is that the registration firm has the power to hold innocent parties to ransom. It is a form of Internet terrorism."
Managers at Liberty Broadband working over the weekend spent three days trying to contact DotRegistrar to rectify the problem, but their telephone calls, e-mails and faxes went unanswered.
Craig Timmis, Liberty's operations manager, said, "We spent five hours back-to-back calling [DotRegistrar] constantly. It was just voice mail, voice mail, voice mail. I am sure we crashed the machine with messages but we did not know what else to do. We sent more than 200 faxes. We had no choice."
E-mails sent to Icann by both Liberty Broadband and its customers also met with unhelpful responses.
The problems were resolved only when Liberty threatened to fly its chief executive and a lawyer to DotRegistrar's US offices.
It later emerged that DotRegistrar had disabled the domain names without informing the ISP, after unsuccessfully attempting to charge registration fees to the credit card of a former Liberty employee.
DotRegistrar told Liberty it believed it had been the victim of an attempted fraud.The ex-employee had been in the habit of paying for registrations on her husband's credit card and then claiming the money back on expenses, explained Timmis.
"Our strategy is an exit strategy with DotRegistrar. Obviously what they did has had an impact on our business. Although most companies did not notice, for a few companies the effect was quite severe," he said. "We don't want to be at the mercy of a company like that again."
DotRegistrar was unavailable for comment at the time of going to press.