Too many things wrong with 1&1 to even list!
I have used 1&1 for both domains and hosting for over 4 years. I would have left them long ago, but they make it nearly impossible to cancel or transfer service, at least without paying double. Their domain interface has no bulk features, meaning that dns, lock/unlock, transfers,etc all have to be done one at a time, usually takes three or four screens to do the most mundane functions.
The real evil brilliance is in their TOS, a must-read for anyone seeking to write a "How to sodomize your customers" contract. Its terms include a mandatory extra year registration fee to transfer domains out, express rights to bill your credit cards months and even years after you have transferred or canceled a service or domain, automatic assignment of accounts to collection agencies for unpaid domain fees after 7 days (In violation of ICANN, of course) and, finally, since the laws of the Commonwealth of Pennsylvania are not good enough, 1&1 even tries to change the legal statute of limitations for complaints against them from 3 years to 1.
Here is a sample from their TOS:
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2.2.5.
1&1 will accept the transfer of domain names from other registrars, provided however, that you will be required to pay for an initial year of registration fees upon transfer. Domain names which have been prepaid for a period of more than one year but with fewer than nine years remaining may also be transferred, subject to the payment of an initial year of registration fees. An additional year will be added on to the remaining term of any transferred domain. Domain names with more than nine years remaining on the registration period may not be transferred. Upon the expiration of the one-year extension you will be charged an annual renewal fee for any subsequent renewal period. By requesting the transfer of your domain name you authorize 1&1 to debit your Payment Account for the one-year registration fee and any related fees or charges.
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In other words, months after canceling a hosting service or domain name, they will still bill you on the anniversary date of the service, if not before. I experienced this firsthand. Using cancel.1and1.com never works and you have no proof that you clicked the links on their emails, so it took certified letters from me with screenprints to escape their re-billing!
If you have had problems with 1&1, here is another helpful post from:
http://www.brainfuel.tv/1and1-hosting-cancellation
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I am an investigative journalist, and have just had a major run in with 1&1 over a fundraiser that they botched the website. Thanks to industry contacts, we have an active file with Tom Corbett’s office at the Pennsylvania Attorney General’s Office. Here is the information if you’d like to be added to one of their many complaints:
Madlene Dakour
Bureau of Consumer Protection
Philadelphia Regional Office
21 South 12th Street, 2nd Floor
Philadelphia, PA 19107
(215) 560-2414
She is great, and is taking information regarding problems with 1&1. We are also working with other national media venues regarding this story, and currently have more than 10,000 written complaints within a few days. Keep up the fight, and keep calling the BBB and Attorney General’s office.
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All of the above is just the tip of the iceberg, I haven't even started on the problems I experienced with their hosting service or billing department. Do yourself a BIG favor, and go anywhere else for domains or hosting!