While the exact scenario you're describing is incredibly unlikely, lots of people have been screwed over by bad registrars. So when registering a domain, definitely look beyond just the lowest advertised price. There are a lot of ways that a bad registrar can screw you over.
Some of the stories I've come across include:
- Registrars that charge you extra for standard services like private registration.
- Registrars that operate cross-TLD sales scams (e.g. you registered example.com and later receive an email from your registrar that another user is trying to register example.net, but you can prevent them from doing so by purchasing example.net ASAP).
- Registrars that frontrun, i.e. snatch up domains you intend to purchase so that they can auction them or force you to register the domain with them.
- Registrars that charge extortionate rates to recover domains during the "grace period".
- Registrars that typosquat against your domains/trademarks.
- Web hosts that register their subscriber's domain to themselves, and basically just leasing the domain to the subscriber while legally maintaining ownership.
- Registrars that give away your domain due to incompetence.
- Registrars that intentionally delay the transfer of your domain to another registrar, keep billing you, and then take down your site when you fail to pay.
- Registrars who use your domains as their private billboards, and even going so far as advertising your competitors on your domain.
Because of "domaining", the domain registration industry has evolved to be quite sleazy and typically has lower ethical standards than other industries. This can be seen in the fact that GoDaddy, the biggest registrar in the world, does much of its business with domain squatters and even spammers. Naturally, registrars like GoDaddy and Namecheap also have no qualms with doing business with domain thieves.
In light of the inherent sleaziness of the industry, it may be better to register your domain via a web host who just happens to run their own registrar but which isn't their primary source of revenue. In my experience, these registrars are much less likely to be involved in domain squatting/speculation or other unsavory practices, as they're carrying web hosting industry ethical standards over to domain registration rather than GoDaddy's case of carrying domain registrar ethics to web hosting.
My general rule of thumb for picking registrars/web hosts is to find a different company if:
- ...they charge extra for standard features that cost them nothing (e.g. private registration, email addresses, subdomains, etc.);
- ...they operate a domain auctioning service or otherwise partner with or do business with domainers/squatters;
- ...they use parked and/or expired/suspended domains as billboards and derive profit from contributing to the sea of spam sites on the web;
They're a good registrar if they don't do any of these things and even go the extra step to discourage domain squatting and the creation of low-value spam sites by refusing to do business with such individuals/organizations. One such registrar I can vouch for is DreamHost (technically their registrar is New Dream Network, but they don't have a separate site), who prohibits the use of their services for putting up spam or affiliate/MLM marketing sites.