The "close and substantial connection" rule was introduced in 2002. It was intended to provide a limited degree of flexibility for registrants to register domain names that are not derived from their own company or business name, but are nevertheless connected to them in some way. Refer to section 10 of the Guidelines for Accredited Registrars on the Interpretation of Policy Rules for the Open 2LDs (2005-02).
auDA has ruled in the past that it is acceptable under the close and substantial connection rule to register domain names for the purpose of providing Internet directory services or information portals. For example, if a registrant provides a real estate directory service then it would be acceptable for them to register domain names that are connected with that service (eg. houses.com.au, apartments.com.au, land.com.au, estateagent.com.au and so on).
It has recently come to auDA's attention that some registrants have been using this interpretation of the close and substantial connection rule to register large numbers of domain names apparently for the primary purpose of capturing web traffic and/or selling click-through advertising.
auDA is currently considering whether this practice is acceptable under the close and substantial connection rule.
Until auDA has issued a policy clarification, registrants who engage in this practice should be aware that auDA reserves the right to delete the domain names for breach of policy.