I own a couple of domains where I currently have "WHOIS privacy", so my contact info is not revealed in the WHOIS database. I've learned that this arrangement has a significant pitfall, that is, it's the privacy company that really owns the domain, and they license it to me. That seems bad.
This is generally not the case.
ICANN recognizes two types of WHOIS privacy services: "privacy services" and "proxy services". Their explanation of the difference is that:
- A privacy service lists alternative, reliable contact information, like an address or phone number, in WHOIS while keeping the domain name registered to its beneficial user as the registrant.
- A proxy service registers the domain name itself and licenses use of the domain name to its customer. The contact information of the service provider is displayed rather than the customer’s contact information. The proxy service provider maintains all rights as a registrant (such as to manage, renew, transfer and delete the domain name), and assumes all responsibility for the domain name and its manner of use.
The vast majority of WHOIS privacy services provided by registrars are, indeed, privacy services. They do not register the domain on your behalf, and do not take on any of the responsibilities of a domain registrant. The domain still belongs to you, regardless of whose name happens to appear in the WHOIS information.
True WHOIS proxy services are rare. As they take legal responsibility for your domain name, registering a domain through a proxy service is typically much more expensive than registering it normally. Since they are considered the legal owners of the domain, "enabling" or "disabling" a proxy service will require a domain transfer, unlike a privacy service, which can be enabled or disabled simply by changing the domain's contact information.
(Confusingly, "Domains By Proxy" -- a brand used by GoDaddy -- is actually a WHOIS privacy service.)