Check out this great post in the GoDaddy Garage on domain security:
There's a lot of helpful information here.
What do you think?
I discovered a phony website using my registered Domain name as well as my registered business name and website description, on this website Google has adsense adds in place as well as other advertising such as Horoscopes and psychic readings, I am in the process of filing a formal complaint with the FTC as well as ICANN, and the WHOIS data base fraud dept. the spoofed name of the website is as follows uricmpr.com/www/astrorealm.net,
I am the registered owner of astrorealm.net, how this has been allowed to happen is an outrage,I purchased Domain privacy which I was led to believe by Go Daddy is supposed to protect against this issue My website has been shut down due to this fraud...
My website is no longer active for reasons unknown, my listing appears in Google, Yahoo and Bing search results but is not clickable, rest assured I will get to the bottom of this fraud and bring charges against any and all companies that placed adds on this site, my next step will be filing a formal complaint with the F.B.I.
I'm really sorry to hear you've been experiencing this. Looks like you were able to get your site back up.
Regarding the privacy, this service is for protecting your public WhoIs details from being publicly listed for others to view online. It doesn't prevent malicious activity such as what you've described here.
Hopefully you're able to get the matter squared away. The only advise I can give from here is to get in touch with the site owner and request they remove the content. If they're refusing to take any action, you may want to contact their hosting provider for further assistance.