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If its a letter of your domain thats not business like imo. The idea of affiliates is that we send our OWN traffic to you in return for a cut of the sales. This would make me angry as there stealing your traffic and reselling it back to you.
That fraud in my view.
I would offer to buy the name off them for a small mark up, if they dont comply, call your lawyer!
(of course if there making next to nothing off it, then its not worth the hassle).
Did anyone read about utube.com thats getting millions of youtube.com's hits every month? Id fill that site with ads myself, there talking about sueing you tube
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