Shady Practices of the Domain Name Industry: My Experience

The recent DomainSherpa article “How to Keep Your Domain Name Searches Safe From Poachers” by Michael Cyger made me think of those times during my years of domain name purchases when I experienced things that seemed odd. Although I could not prove anything when it happened, I knew something was off. As a matter of fact, I even tweeted back to Hiten Shah and Chris Dixon, who had both tweeted the original article, expressing my belief that I have been the victim of shady activity in this industry.

In fact, I had a recent experience that fell in this category. I was going to simply ignore it, but then as I sat in traffic on 128 outside Boston, I just got more heated and ultimately decided I wanted to share my story.

Let me start by saying that what I recently experienced is not necessarily domain name front running (DNFR), but it feels like it is in the same family.

For you impatient folks who do not want to spend the time reading my likely ridiculously long recounting of the event, the short story is:

A domain name I wanted that was not in auction is now in auction, for nearly $3,000 with zero bids and virtually no views (with exception of mine) – all within hours of my showing interest.

If you want to know more about how this came about, keep reading.

So, I had a project I was working on, and as most of us do when we have projects, I looked for an Internet identity in the form of a domain name. I wanted to go with a short URL model like a .ly or .do. After thinking of what would make sense, I searched and found just what I needed and registered it, along with a few different variations. Afterward, just for kicks and to cover my bases, I looked up the .com, .net and .org version too.

My search showed that the .com was registered – not in auction, just registered. No biggy, I thought to myself, I’ll just get the .net and .org and then maybe follow up with the owner of the .com later to see if they want to get rid of it for a reasonable cost. A few days passed and I decided to visit the .com domain name to see if there was a website with contact details. I did not find a traditional website, but a parking page with a link on it to buy the domain name like the one you see here:

Want to buy this domain? Our Domain Buy Service can help you get it

I decided I would try this since I was going to reach out to the contact anyway. Coincidentally, I had been contacted through this very same service just a few days prior about a domain name – a variant for my current company – that I was unwilling to sell. I was curious, how well does this stuff work anyway? I forked over the $69.99 to find out.

Once I paid, it took about 8 to 10 hours before I got an email notifying me that an appraisal was ready – you know, an “official” estimate of what someone might be willing to pay for this doman name. The estimate came in at between $1,200 and $1,600. The high range concerned me – was this process going to be biased?

Certified Domain Name Appraisal

After getting over my initial frustration with the high price, I figured I was screwed. Surely the person with the domain name was going to ask way too much, right? Well, not exactly. In fact, I wonder if the person was ever informed of my interest, at least in the way I would have expected them to be.

Here is where the story really gets interesting, for me anyway. About 4 to 5 hours after getting my appraisal, I received another email telling me I had a refund for $79.99. Yes, a refund. And no explanation as to why. I would have expected something like, “The person was not interested in selling,” or “Because the person is not interested in selling, we want to be nice and refund your money because we did not do much for you.” Instead, I got no explanation, just, “Here’s your refund.”

To understand what happened, I called the domain name registrar. I was told that since the domain name was “in auction” I could not buy it through this process. Recall, however, that in my original search of the .com domain name, it was “not in auction, just registered.” Brimming with frustration at that point, I immediately looked to see if it was in fact in auction. Sure enough it was:

Domain Name Detail

Coincidence? Who can say for sure, but it certainly smelled suspicious.

You may be wondering how I knew the domain name was not already in auction when I originally looked it up. The way their system works, if you look up a domain name and it is in auction, they tell you it is in auction. That did not happen in my first lookup, but now it does. Here is the new lookup result for the domain name I wanted to buy:

Domain Name Lookup in Auction

So what does this mean? Does this prove anything? Let me make a few observations and pose a few questions.

  1. Notice from the screenshot that the auction has only 2 views (maybe 3 or 4 now because I needed other screenshots) and 0 offers. I am convinced most if not all views are mine. If this domain name had been in auction longer, you would expect more views, especially based on the price it is listed for.
  2. Look at the categories (word and phrases) in the auction: it is listed as “cool.” Really? I can tell you the name is not that cool, and if it were, I would suspect more views and offers.
  3. Did the person who owns the domain name get notified that I was interested in purchasing it? If so, did this make them want to put it in auction? Were they encouraged do to that?
  4. Did the .ly- and .do-like searches along with the registration of .net and .org domain names have an affect on how this process was handled?

Unfortunately I do not really have a satisfying conclusion to the story, and I do not know the right answers to the questions my experience raises. I do know that similar situations have happened to me over my reasonably long career of registering and managing domain names. I know that I likely cannot prove this, nor have I ever tried, but since this experience happened so close to a recent post about DNFR I felt compelled to vent the details. And I know that going forward, even though I think I am somewhat knowledgeable and cautious in this area, I need to modify my approach to domain name registrations.

Comments are welcome.

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22 Responses to “Shady Practices of the Domain Name Industry: My Experience”

  1. Mea says:

    I’m sorry to learn about the trouble that you had using our Domain Buy Service. I assure you that our goal is to help our customers be successful, and I will attempt to address your concerns as directly as possible in order to avoid any additional confusion.

    The Domain Buy Service is a service we provide to see if the registrant of the domain is interested in selling the domain. If they do have an interest we will help negotiate the sales price and facilitate the sales transaction.

    The Domain Buy Service department caters to the buyer’s interest; once you have purchased the service we will provide you with a domain appraisal. This appraisal is an estimated value of the domain and is provided to assist you to determine your purchasing limits only if you are unsure where to start. You are not required to use the appraisal value in determining your purchasing limits, and we do not provide the appraisal to the current domain name owner.

    Once the appraisal step is complete we perform a post-purchase check to make sure the domain you are interested in is not available through any of our other platforms. In this case, the domain was listed on the auction by the registrant during this check — at the time it was listed we had not communicated your interest in the domain to the registrant. Since the domain was listed for sale by the registrant, we issued you a refund as the Domain Buy Service was no longer a value to you.

    When listing domains on auction sellers are able to select the categories they want to classify their domains. These categories are used to search for domains that meet this criteria when searching for domains on the auction as a buyer. The seller of this domain has selected their domain to fit into the “Word & Phrases: Cool” category for this search purpose.

    When you use the Go Daddy website to search for a new domain, we do not share this search information with ANY customer or client. Domain name owners are not informed by us if you had purchased the same domain they currently own with a different extension (.net, .org, etc).

    I hope this message has helped you to better understand how things work, but I understand you may still have some questions. If so, please feel free to contact us.

    Mea
    GoDaddy.com Aftermarket

    1. Thanks for posting a response to this article, Mea. To me, your response shows that you care enough about this incident to respond and clarify, and to me that means a lot.

  2. Andy says:

    All businesses are shady. My dentists charges me $160 for one filling, I find that shady given the 15 minutes work involved. Car dealers are shady, real estate agents are shady, lawyers are shady, the stock market is extremely shady (even Warren Buffett is being sued by his own shareolders for recent shady practices by one of his employees), Ebay is shady, plumbers are shady and banks are the shadiest con artists of them all ! In fact I think I could go on a long time listing shady businesses. So really my point is that although your experience was interesting for an outsider and annoying for you, it is basically what capitalism is all about, i.e. charging as much as you can and filling your pockets as quickly as possible on the money merry go round. The lesson is that if you are a buyer you need to be extremely careful – the seller is there to make as much money as possible, in this case it appears he made no money at all as I assume you didn’t buy his name. But interesting stuff nonetheless.

  3. Anonimity says:

    Here’s what I can say about this with as much tact and anonymity as possible (to protect and respect certain individuals and not jeopardize their job or professionalism):

    My partner does this for a living. From the screen shots and information provided, he/she may work for the company you contacted (this specific department is very small and personalized). The stories I have heard regarding owners (and sometimes prospective buyers, to be fair) are sometimes outlandish.

    There are countless times when someone expresses interest which is reasonable and legitimate only to have the owner of the .com, once contacted, to act unreasonable. They believe they have hit the jackpot and need to milk the experience for all it’s worth. It’s sometimes even in these situations in which you will be refunded your money. In my opinion that is above and beyond. They are refunding your money when they don’t have to, simply because it is the right thing to do (the jackass of an owner is basically wasting everyone’s time and will even say so).

    It sounds like what you experienced is exactly that.

    You requested a domain buy service. They provided you with an appraisal (which theirs are pretty average. They are not the most conservative but they’re not outlandishly high such as the urlappraisal.net’s) and contacted the owner to begin negotiations. The owner saw the expressed interest in their domain, refused to sell and decided to try to capitalize on this interest (because as I said above, most people feel that if there’s even marginal interest they’ve hit the domain jackpot).

    While there are no commissions to be made, there are numbers that must be accounted for. It is an extremely small and personalized department which requires certain work ethics to maintain. It is highly sought and if you do not work efficiently and with balanced “numbers”, there is ALWAYS someone waiting in the wings for your job. It would serve one of these agents absolutely no good or purpose to refund your money, advise the owner to go to auction and close communications on the deal. That scenario would actually mark against the agent.

    In other notes: It’s actually policy to start negotiations at the very lowest offer from the buyer. No more, no less. Being hired by the prospective buyer it is also common practice to explain to the seller the whys and hows if the asking price is overpriced (although this rarely keeps people from that lottery mentality, sometimes logic and proof do prevail). They do exactly what they are hired for: communicate and negotiate the domain to the absolute best of their abilities with every resource provided to them with the buyers and then seller’s interest at heart. I remember raising my eyebrows in hearing this and yet overtime it was actually shown to me that they do have the buyers interest at heart too. (Imagine that! I was genuinely impressed)

    I will say, however, that I find it to be in extremely poor form for you not to have had the refund explained to you. Someone dropped the ball there..

    1. Very well put. Thanks for posting your comments.

    2. Anonimity says:

      Correction:

      To clarify the above post, I wanted to specify that I didn’t mean to write a misleading notion that it was the set in stone actual company policy to start with the buyer’s lowest offer. The agent’s generally open with a low offer to keep the buyer’s best interest in mind.

      Reference:
      *In other notes: It’s actually policy to start negotiations at the very lowest offer from the buyer. No more, no less.*

      Just re-read and realized I could not edit. I’m very pro-truth and clarity! My apologies for not proof reading after a quick reply.

  4. randomo says:

    I see nothing wrong with the owner putting this domain up for auction after finding out that someone was inquiring about it (though he’s apparently way overpriced it … which is his prerogative, even if it’s not too smart).

    The one “shady” activity that may have occurred is the domain owner being informed that someone had bought an appraisal on a domain that he owned. If I were the owner, I would certainly want to know when that happened, but from the appraisal buyer’s viewpoint, it’s bad news. So if the company really does inform people when appraisals are ordered for domains they own, that should be made clear before someone orders an appraisal.

    It’s sort of like real estate brokers – you have to know whether someone is a “buyer broker” or a “seller broker” before you discuss your interest in a house and how much you might be willing to pay for it.

  5. Poor Uncle says:

    I am confused. At which point did the shady activity took place?

  6. DropWizard says:

    I’m not familiar with the go daddy system as I’ve never done biz with them. I can only agree with tx domains above that it is the owner’s perogative to do anything they want including putting it up for auction.

    Somehow just because people think of a domain name they seem to think they’ve now gained some proprietary right in the name.

    When someone surfaces for one of our names I may negotiate with them. I may blow them off, based on how they open the correspondence. I may blow them off because they send a ridiculously low opening bid. I also may put the domain into auction because I believe it has thte potential to go much higher and just needs more attention.

    Generally if it goes to auction I’ll write the top users of the term and let them know about the auction.

    If the bids don’t make my reserve I may pull the name and not sell it. I’ll wait for that “right buyer” in the future.

    Frankly your real mistake in all this was wasting $69 for an appraisal. Those things are absolute junk.

    1. Mike Rowan says:

      I think you just made my point about the appraisal. If you see my reasoning, this should make it clear, I wanted to see how thee process works in detail. Not from a ignorance standpoint, but from an experienced owner. Clearly this very step had influence on the outcome, and if it did, and all this happens within one domain eco-system (registrar) whom has more information and knowledge about me than anyone else, this is a concern.

  7. Ted says:

    This whole industry is shady. From front running to “friend running”. I’ve watched and waited for domains to drop at drop catching services only to see the names transferred before the drop happens.

    Who do you contact when this happens? Nobody, because it just gets swept under the rug. It’s frustrating and wrong but there is no way to stop all these behaviors.

    After seeing all this crap go on for so long in so many areas in the industry it gets really tough to be excited about domains.

  8. Joe says:

    No idea what you are talking about. You expressed an interest and he submitted it to auction

  9. BB Smith says:

    I’m not so sure that anyone did anything wrong in this case. However, I understand why someone who doesn’t understand the domain name industry might think they’ve been hoodwinked.

    Here’s the way I see it:
    1. You used a third party service to contact the domain name owner to do a deal
    2. The owner said, “nah, no deal. I’ll go to auction. If they want it, they can bid.”
    3. The owner set up the auction and put in a too-high initial bid price (based on your stated appraisal value, which makes an assumption that the brokerage knows what they’re doing)
    4. You, as the person interested in buying the domain name, are pissed because you think they should have replied directly to you

    In the end, I think it IS very strange that the brokerage firm did not explain why they refunded you the money. I suspect they did it because the domain name owner flat out refused to sell it and told them s/he was going to auction. Who knows? But it WAS nice they brokerage firm refunded you the money…they could have kept it because they fulfilled their obligation to contact the domain name owner in good faith on your behalf.

    If the screen shots are valid from the domain name you wanted to purchase, it looks like it’s Go Daddy. On their brokerage page (https://www.godaddy.com/domains/domain-broker.aspx), they say:
    * Attempt to contact current domain owner, to determine interest in selling their domain.
    * Negotiate the sales price of your desired domain (if the owner is willing to sell their domain).
    * Help facilitate the sales transaction (if a sales agreement is reached).

    No harm, no foul. Try contacting the domain name owner directly and offer them a fair value, say $1,200. Get the communication going and see if you can do a deal.

    Just my 2 cents.

  10. Gnanes says:

    What’s so shady about this?

  11. Gnanes says:

    Are you sure that listing wasn’t for 90 days? Make offer listings are usually for 90 days.

    @Tony: You posted a $50 offer. No auction runs for 90 days. Any auction on GoDaddy is maximum 7 days unless it’s an expiring domain. Usually 10 days. 90 day listing are for Make Offer.

  12. Dean says:

    Your kidding right? this industry is full of manipulators and scoundrels and runs from the bottom all the way to the top and it’s big players. The registrars and domain houses cater to the big players and it’s one thing to register or own quality domains but it’s a complete another thing to sell it through a prominent broker house. It’s the most corrupt and nepotism driven industry they’re is.The best advice In can give someone is to not give in to these crooks and hold out, If you have a quality product hold out as long as you can, eventually the tide will turn.

  13. BullS says:

    Hey, business is business. Always getting the most $$$$ from you.

    Thing about it, it is good for the economy. Money needs to flow to keep our economy strong and vibrant- so do your part,

    1. Mike Rowan says:

      All I can say is Hrm… Don’t even have a good response for this comment, I’ll admit it.

  14. TX Domains says:

    The domain owner is in their full right to do whatever the heck they want with their domain. If you approached a person who lives on the beach and said, “I want to buy your house”, only to find that they immediately listed their house for sale with a realtor, would you think that was some form of front-running or a back-handed maneuver? Come on, please.

    I think it’s just ignorance on the part of the general population when it comes to domain names. No offense to the author of this article — I’m thankful you shared this story so we could discuss it.

    I’m trying to think if I’ve done the same thing after being approached by an end-user…

    1. Mike Rowan says:

      Mike here, the writer of the article. I thought I’d provide a bit more feedback into the issue, especially since I have thought about things a bit more.

      First, some house cleaning regarding TX Domains’s comments about “ignorance on the part of the general population”. I wouldn’t say this is actually the case, nor would I consider myself general population in this case. I’m no expert, but have experiece in the ISP space, and on the technical side of several large businesses, and in addition currently manage 300+ domains for both professional and personal purposes. I point this out only to show that I have had exposure on both sides of the fence and have had all sort of interactions related to domains and policy.

      Next, granted what “is” being done is not actually illegal, it’s uncomfortable and there is a very fine line when it comes to good business. Let me share a couple key points to help anyone with this discussion.

      – I am a customer of several registrars, this one included, let’s call it registrarA
      – The .com version of this domain is held by registrarA
      – The .net/org versions of this domain are owned by me, and also held by registrarA

      With the above information, adjusted “insider” decisions can be made, which as a consumer of any service is very concerning, at least to me. Did events happen because registrarA knew certain information about me, my preferences, my needs, and the likelihood that I might buy? Sure, you could look at this as a form of personalization or recommendation, but is this really what it is? Also, the .net/org versions of the domain have privacy protection, should registrarA be allowed to use inside knowledge for up-sell like this?

      I would be surprised if any consumer reading this would agree with registrarA. I totally see how domain providers will, which is half the problem.

      1. Dollar Domains says:

        This is exactly what Rick Schwartz is talking about in the domain industry:
        http://www.dnforum.com/f17/another-scandal-rocks-domain-world-rick-schwartz-outs-chef-patrick-thread-450259.html

        People who work at registrars do not treat the OUR information as we would expect them to — as stewards of our private data. I expect my registrar to be the same as my bank: my personal information is just that — personal, and should not be shared.

        We’ve seen registrars admit to domain name front running, use personal information that was under privacy protection, and shill bid up auctions. And these are only the ones that were found!

        While Mike Rowan can’t prove anything, what he’s saying here is valid because the registrar was not being upfront and being clear about why they were refunding his fee.

        Something does appear to be shady here.

  15. Tony says:

    Yes, I fully agree. I’m a designer and was putting together a website for a friend. The website domain name was way too long, so I tried to get her a shorter one…using the main two words she wanted. I visited the domain name and it said it was available on Go Daddy Auctions. So I went there and tried to bid on the domain name after registering….only to be told I needed to pay $5 to bid. Ugh. Ok, so I paid and bid on behalf of my friend.

    Go Daddy Auctions said the minimum bid was $50 so I bid it. The auction lasted for 7 days (or something like that). I waited. I waited. At 1 hour until the end of the auctions, I excitedly signed on to see if I was the top bidder still, and lo and behold the auction was extended by another 90 days.

    WTF? Who runs a business like this? Either it’s in auction or it’s not. I can understand if it has a reserve price, but the Go Daddy Auction page said bid minimum: $50.

    The domain name industry is shady, in my opinion too. I don’t know why Go Daddy can’t make things more clear to the average person, which is CLEARLY who they’re going after with all their Superbowl commercials.

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