status-done Caution to members - People selling domains they don't own

[MapleDots]

I get a lot of PM's from members asking me to purchase domains.... and I mean a lot.

I have bought quite a few and it's no secret that I am willing to pony up the dough if the domain appeals to me.

However, I am noticing a little trent here and it's the third time this has happened to me.

A member will send me a message asking me if I am interested in a half dozen or so premium domains. Of course I assume the member has ownership of these domains and I begin discussing the possibility of 1-2 acquisitions. The problem is on a couple of occasions the members I'm dealing with don't actually own the domains. I waste a lot of time and then find out there is a different owner. So if they negotiate 5k with me then they try to get it for 2.5k from the owner. I guess I am at fault because 5k is my magic bidding number and people know that.

So today I get a PM from a member asking me to negotiate on a half dozen premium domain names and coincidentally I was just conversing with the real owner on three of the domains.

I asked the guy if he had ownership and of course I already knew he did not. I reported him to namepros and the real owner of the domains.

Turns out he read my post on namepros where I said I will pay 5k for one word .ca domains if they meet my criteria as a positive meaning, singular, dictionary term.

So to give an example, he knew I paid good money for red.ca so he substituted another color, contacted the owner, asked him how much and then marked it up by 5k and contacted me.

Problem here is the real owner had no idea and he made no mention to me that he was not the owner of the domains.

I reported him to namepros but in retrospect he will probably get off scott free because he will claim he was just trying to broker the sales.

So the question I have is can you really broker a sale when neither the buyer or seller has any idea that someone is trying to broker the domain?

 

[Kate]

So the question I have is can you really broker a sale when neither the buyer or seller has any idea that someone is trying to broker the domain?

Fraudulent of course. Can even lead to legal issues.
It's also called front running in our industry.
Name and shame please.

 

[urlurl]

selling something you dont own is fraud, should be reported and the member banned. If the original owner can confirm he had no contact with the slimy seller - there's proof and the NP member should be banished.

it is bad practice and unless the forum deals with it it will continue.

 

[MapleDots]

selling something you dont own is fraud, should be reported and the member banned. If the original owner can confirm he had no contact with the slimy seller - there's proof and the NP member should be banished.

it is bad practice and unless the forum deals with it it will continue.

The original owner did quote on the domains both to this member and to me, that is how I put it together.

Problem is the member was trying to sell it to me before he had ownership and at a marked up price. Meanwhile the owner had contacted me (away from the forum) asking if any of the domains interested me.

When I contacted the owner he had no knowledge of the situation. He did say he quoted the guy but was not aware anyone else was trying to sell his domains.

So that is where I am, the member claims it was not fraud and he is a member in good standing. I'm not terribly upset by the situation but it does merit attention and member feedback.

I'm still trying to figure out if I can advertise my neighbours car for sale even if I don't own it. I'll sell it first for 5k more and then buy it from the owner. Meanwhile the owner is trying to sell the car himself with no knowledge that someone who looked at it is trying to sell it at a mark up before he has ownership.

It is a fine line, some may call it fraud and others may not, that is why we must clarify it on the forum so that it is clear whether it is allowed or not.

Personally I cannot say for sure what the members intention was and I am willing to give him the benefit of the doubt but it is up to namepros to set the rules.

 

[BrandPlease]

Not exactly the same but the same kind of - scamish behavior.

Got an email the other day about a great domain, in his client's portfolio, that is like another name I own and wanted to know if I wanted this one. The catch was, he/she/them we trying to sell me one of my own names. I asked back who the client was because I own it - and haven't heard back hahaha.

 

[equity78]

There are a bunch of different examples here given by different members. Some don't equate to what the OP stated.

I call it Name Arbitrage, but arbitrage can have risk as well, when I was a stock broker back in the day there were plenty of people who liked to find arbitrage deals there was even a fund that was all they did, Company A has a takeover bid at $25, while trading at $15 the previous day, the stock is up big to $23.99 say, most people sell. But arb funds will buy stock at $23.99 to lock in that $1.01 profit. The deal risk is the deal falls apart months down the road and the stock goes down big time.

Seeing a name listed for sale at $10 in the chatroom and also monitoring domains wanted threads with a $500 buy price, is not unethical or wrong if you go and buy the domain for $10 and then try to sell the domain for $500.

Now some people look at it and say hmm, I don't want that name for $10, it's a niche I don't like or understand, but if I can get someone else interested at $500 let me pitch them, if they say yes, I go back to the seller, say I will give you $10, paypal them, accept push and then sell for $500, heck you can take $200 make a great quick flip with no real risk involved.

Now you do need to be on top of that person in chat, maybe after you left chat they sold to someone else, you don't know that, you are pitching a name to the DNW thread starter that you cannot get.

Now what the person pitching @MapleDots was playing a high stakes game of Domain Chicken. The person was not a broker, did not say they had an option on the name from the buyer, so they are completely playing a dangerous game, what if the owner has seller's remorse and says I know I quoted you $3,000 but I emailed Rick Schwartz and he told me I would be an idiot to take less than $10,000. So not selling. There are too many variables and @Support Team really does need to have an official position.

Perfect example of what we are talking about, I do broker names and have clients, now a client gave me a name with a $30,000 price, absolutely have authority to pitch the name. But we don't talk everyday, he told me two days ago he has changed his asking price to a 6 figure number, now I believe they would have honored a $30,000 sale if I contacted them first, because we have a long and good relationship but if they said sorry not selling for $30,000. I would look bad to a buyer and I have authority. It's a risky game you can win but you need to get in and get out, and just importantly it needs to be under the radar.

 

[karmaco]

People try every trick in the book here —even sell unregistered names lists. Everyone has their own idea of what is ethical and what is not. I hate to use this term but I will—opportunists.

Opportunists are not all bad. From the oh so and so sold? Let me go register variations backwards,forwards,in Spanish and all available extensions

Then there are the kind of tactics you mention here which I would call smarmy. There are worse tactics than what happened to you.

People hungry for money can get desperate and do questionable things. I would like to know who did this but if it’s not against any NP rules you cannot call them out.

Another way to look at it @MapleDots not everyone can afford $5K and up for a domain so of course you will attract attention and solicitations.

 

[mr-x]

Show attachment 92120
So the question I have is can you really broker a sale when neither the buyer or seller has any idea that someone is trying to broker the domain?

It's called front running. Not illegal but unethical. If the seller lies about ownership, it's fraud IMO.

If he or she lied, you should let us know the name.

 

[domaineed]

The issue is that this info can also be acquired purely incidentally. For instance, one day I saw in the chat room that someone was selling a name for $10. A few days later, someone requested such a name with a budget of $500. I see the opportunity and try to exploit it. Now, this might seem unethical to many. However, it is great/ethical if I bought a domain for $4 in the bargain bin and sold it for $4000. To me, seller lost, buyer lost, I won. The seller thinks he won as he was not going to renew anyway. The buyer thinks he won as he only paid because of the perceived value. What if all the parties have access to the same information. No deal, nobody wins, or if know later, regrets. One man's trash is another man's treasure because of the differences in understanding and risk appetite. What if the OP and the real owner didn't come across the actual information. Everyone should have thought they won. Opportunism in one form or another is an integral part of capitalism, and poorly regulated capitalism has lots of ethical issues, imo

It appears to be a legal problem, and NamePros or a legal expert would probably be best equipped to answer OP's concerns, imho.

 

[MapleDots]

The issue is that this info can also be acquired purely incidentally. For instance, one day I saw in the chat room that someone was selling a name for $10. A few days later, someone requested such a name with a budget of $500. I see the opportunity and try to exploit it. Now, this might seem unethical to many. However, it is great/ethical if I bought a domain for $4 in the bargain bin and sold it for $4000. To me, seller lost, buyer lost, I won. The seller thinks he won as he was not going to renew anyway. The buyer thinks he won as he only paid because of the perceived value. What if all the parties have access to the same information. No deal, nobody wins, or if know later, regrets. One man's trash is another man's treasure because of the differences in understanding and risk appetite. What if the OP and the real owner didn't come across the actual information. Everyone should have thought they won. Opportunism in one form or another is an integral part of capitalism, and poorly regulated capitalism has lots of ethical issues, imo

It appears to be a legal problem, and NamePros or a legal expert would probably be best equipped to answer OP's concerns, imho.

I'm going to try to respond to this...

You see a name for sale for $100 and you do not own it and you quote me $1000. If by some chance I agree to your terms and buy it from you there may be a myriad of issues. What if for some reason you cannot acquire the name? You will get banned from the marketplace for welching on a deal. Additionally the name has to go through two transfer processes before I can own it.

It boils down to you agreeing to take payment for something you do not own.

You see no ethical implications for this?

If you told me you were acquiring this name then it would be different but if you are approaching me on the basis that you own these domains then it is unethical. You would be misrepresenting yourself as the owner of the domain. Why would I ever deal with you if you were not the owner.

If you called me up and said I can get this domain for you then that would be a completely different story.

 

[Ategy]

Here the scheme is a bit different. A dude in question takes money from the buyer and then goes buying the domain/car from the seller.

Taking the money without being able to or having authority complete the transaction is 100% clearly wrong and very likely illegal in most jurisdictions. Unless you actually own and/or control the domain (as an authorised broker), then there is no way you can guarantee a sale ... as such the person has zero rights to taking the money unless the specific details are clear along with the fact the transaction could indeed not go through.

 

[Kate]

The bottom line is that you don't try to sell stuff that you don't own, or that you are not authorized to sell.
If what you want is a finder's fee why not - then be upfront.
Pretending that you own the domain when you don't is misrepresentation.
Some of the comparisons are not valid. A domain name is unique, unlike a car, and can't be replaced by another.

If you agree to sell something then you have a binding contract. If you are unable to secure the asset you've just sold, you have a problem.

A few years ago, there was a domainer who was front-running and it backfired (he's not the only one, it is a game that still continues to this day).
There was a prerelease LLL.com at Namejet, so he contacted end users before the auction was even over to gauge interest, and see how much he could make in a quick flip, and how high he could bid.
One end user reacted angrily, asserting TM rights, making legal threats, to the point that Namejet had to halt the auction.

I can't remember the exact sequence of events, I think the name eventually sold later. But it could have turned nasty, with NJ caught in the middle and the other bidders cheated on.

 

[namezest]

Fraud.

 

[alcy]

that doesnt sound like members others should have to deal with on np @Support Team

 

[DN_Hunter]

I see this happen in the "Names Wanted" section.
1) A member posts they are buying names with certain criteria for up to "X" Amount.
2) I send them a private message with names that fit their criteria and budget
3) I get an inflow of visits to the Landing Page for the domain name(s) I sent to the member and/or increased WHOIS lookups based on the GoDaddy Whois Counters. This indicates to me that the member is shopping my names before accepting my offer price in the private message. I can't complain though -- I actually sold a couple of names this way at more than my offer price to the member (as their contact bought it directly from me at the landing page)

So the question related to your situation -- is it ok if I offer names to someone via pm, and they go and shop my names without me knowing it?

 

[Ategy]

I'm on the fence on this one. Certainly not something I would feel comfortable doing. I think the key is transparency and honesty. More importantly I think whether its right or wrong could actually depend on how the person worded their offer.

"Would you be interested in ____.com for $5k" = isn't too bad
"I'll sell you ____.com for $5k" = clearly is wrong when you don't have the authority to actually sell it.

Both leave you with the same impression as a buyer .. but one is clearly fraud while the other is more of an ethical/moral question that I suppose could be argued both ways to some degree.

I didn't realise this was actually enough of a thing to have a term for it (front running).

Curious to see what the official @NamePros reply will be?

 

[MapleDots]

I understand your point @MapleDots. The domain industry is still the wild west. There's a reason brokers/asset managers are required to have a license in many industries. They have to ensure compliance even if buyer/seller are not aware of the rules. People trust them and pay a percentage/commission for the services as they are accountable under the law to various institutions. I am sure that Sedo must be a regulated player. The problem with your situation is that brokership or agency was technically not involved at all, imo. It is hard to address this issue in absence of any marketplace guidelines. I think you should share the communication with Support and ask for NamePros' official position on the matter.

It has been shared with support and the members marketplace account has been restricted so therefore namepros has deemed the event against namepros rules.

I understand this decision and why it was made.

 

[equity78]

The bottom line is that you don't try to sell stuff that you don't own, or that you are not authorized to sell.
If what you want is a finder's fee why not - then be upfront.
Pretending that you own the domain when you don't is misrepresentation.
Some of the comparisons are not valid. A domain name is unique, unlike a car, and can't be replaced by another.

If you agree to sell something then you have a binding contract. If you are unable to secure the asset you've just sold, you have a problem.

A few years ago, there was a domainer who was front-running and it backfired (he's not the only one, it is a game that still continues to this day).
There was a prerelease LLL.com at Namejet, so he contacted end users before the auction was even over to gauge interest, and see how much he could make in a quick flip, and how high he could bid.
One end user reacted angrily, asserting TM rights, making legal threats, to the point that Namejet had to halt the auction.

I can't remember the exact sequence of events, I think the name eventually sold later. But it could have turned nasty, with NJ caught in the middle and the other bidders cheated on.

I remember that, it was a complete clusterfest. It's a risky game trying to do this.

Here is a post from 2015, it covered someone posting about selling names they don't own. MorganLinton also wrote about buying names for quick flips before you owned them and comments questioned that? http://tldinvestors.com/2015/04/selling-a-domain-name-you-dont-own-cool-or-not-cool.html

 

[domaineed]

It may appear fradulent at first, but what the OP is describing is the basis for much of all trading activity, imo. You take a quote for your neighbors car. You take a quote from a prospective buyer. You buy it from your neighbor and sell it to the prospective buyer. I don't see anything unethical or illegal here, provided that there was no lie/fraud about ownership/authority involved. It is just that the person was smart enough to ask questions and became more informed than both the buyer and the seller, imo. I agree with @Ategy, it depends on the person's wording. You can't do this with people like Rick Schwartz as they will probably ruin this strategy with a million questions.

And with all due respect, front-running in all its forms (some illegal, some unethical) is something entirely different, imo. For instance, it is a form of front-running when a registrar (broker or asset manager) registers a name itself after gauging interest through no. of whois searches (insider information) and it becomes expensive for other interested parties. Please correct me though if I am wrong. Thanks.

 

[Corey]

2 words

Due Diligence - act prudently in evaluating associated risks in all transactions.

Cheers
Corey

 

[xynames]

Trying to sell something you don't yet own is a practice as old as the human race. Happens with both unique goods (such as, say, domains) and non unique goods (such, as say, trying to sell a commodity). It's not per se illegal, but usually ends up being a waste of time.

 

[IMEZI]

Before talking or even negotiating, you must ask the seller to create TXT record to : this-domainname-dot-ca-for-SALE-to-youremail-at-gmail-dot-com you could recheck this record

If the seller were legitimate brooker with legal/gentlement agreement from the original domain owner, then the TXT record would not be a problem. But if the seller were doing arbitrage without agreement from the domain owner, the seller would be gone without any further reply.

Make this move become your defense line and eventually those unethical seller will be gone, the one who keep contacting you offering premium domain names will be legitimate brooker

 

[gilescoley]

A member will send me a message asking me if I am interested in a half dozen or so premium domains.

Any time you get offered premium domains via PM on namepros, its usually a load of crap. People who own premium names dont PM people out of the blue like that. You dont have to do that to sell premium domains. Even if get offered 5 "premium" names and the WHOIS is the same for all of them, there may one owner, but its not the person who PM'd you.

 

[MapleDots]

I see this happen in the "Names Wanted" section.
1) A member posts they are buying names with certain criteria for up to "X" Amount.
2) I send them a private message with names that fit their criteria and budget
3) I get an inflow of visits to the Landing Page for the domain name(s) I sent to the member and/or increased WHOIS lookups based on the GoDaddy Whois Counters. This indicates to me that the member is shopping my names before accepting my offer price in the private message. I can't complain though -- I actually sold a couple of names this way at more than my offer price to the member (as their contact bought it directly from me at the landing page)

So the question related to your situation -- is it ok if I offer names to someone via pm, and they go and shop my names without me knowing it?

Better yet...

Is it ok to try an sell domains without telling the client you don't own them?

 

[domaineed]

Interesting scenario. People can't sell anything they don't own or they can't sell it to you before they have the ownership There is no brokership involved here. Assuming that the person has not lied to you about the ownership, they are just being clever. I think you can't "assume the member has ownership of these domains". Ask this first, negotiate later. If they lie about ownership or brokership, that is clearly a fradulent activity. However, you must have heard that George Parker was able to sell the Brooklyn Bridge several times. So even after due diligence, selling/buying ownership of property is a risky business indeed.