Following on our explanation of why we do not offer whois masking here at easyDNS, we note tonight that Registrar Namecheap has been sued "over cybersquatting claims for a domain name registered under the NameCheap whois privacy services".
As we outlined in our original article: Whoever is listed as the Registrant in the domain's whois record, effectively owns the domain. If you own the domain, you get all the responsibilities for it. That's why most Registrars simply drop the whois mask at the slightest legal speedbump. Namecheap didn't, and so now it cuts the other way they get the sharp end of the legal stick being poked at the domain.
Technology lawyer Eric Goldman in his analysis of the matter under the subheading Why This is a Troubling Ruling noted:
Read literally, every proxy service is exposed to potential contributory ACPA liability for every domain name it services. I can't imagine proxy service providers will be excited about that liability exposure, and some may choose to exit the business.
Some certainly should. Any of the proxy providers who basically viewed whois masking as an easy business which basically pulls in money for doing nothing (which is more or less how I view it, I'm sorry, but that's only my opinion) – should take this as their signal that the party's over and exit the business.
As I've noted before, in it's current implmentation: whois privacy doesn't actually protect the underlying registrant's privacy (because most proxy providers will drop the mask at the first sign of trouble) and if they don't, the proxy providers are exposing themselves to inordinate risk. Coupled with the fact that the whois mask puts the underlying registrant's rights to the name in question and the whole thing is just one big mess waiting to blow up.