discuss Have you ever been scammed by a domain broker?

[mr.mu]

For example:

A broker comes to inquire about one of your domain names and closes the deal for $5,000 (and takes your 20% commission)
In reality, the buyer paid $10,000 for the domain
You end up netting $4,000 and the broker gets a $5,000 difference and a $1,000 commission.

Several friends around me have personally experienced this kind of thing. After the transaction was completed,
They found the contact information of the buyer, contacted the buyer and learned the amount the buyer finally paid for the domain name, and found that they were scammed by the broker.

This may be the rule of the game in the domain name industry.

May I ask if you have encountered or heard of similar things, welcome to discuss.

 

[GeorgeK]

My company insists on "principals only" to avoid this potential situation (and for other reasons).

You can see what transpired in the VPN.com / Dikian (ongoing) lawsuit, see:

https://onlinedomain.com/2022/07/28...s-26-million-lawsuit-against-domain-investor/

https://www.courtlistener.com/docket/63559525/vpncom-llc-v-george-dikian/

https://www.namepros.com/threads/vpn-com-llc-has-filed-a-multimillion-lawsuit.1279551/

for a public example of the inherent problems of "dual agency". See the response in the lawsuit:

https://storage.courtlistener.com/recap/gov.uscourts.cacd.855964/gov.uscourts.cacd.855964.33.0.pdf

which mentions it.

 

[Gorilla]

For example:

A broker comes to inquire about one of your domain names and closes the deal for $5,000 (and takes your 20% commission)
In reality, the buyer paid $10,000 for the domain
You end up netting $4,000 and the broker gets a $5,000 difference and a $1,000 commission.

Several friends around me have personally experienced this kind of thing. After the transaction was completed,
They found the contact information of the buyer, contacted the buyer and learned the amount the buyer finally paid for the domain name, and found that they were scammed by the broker.

This may be the rule of the game in the domain name industry.

May I ask if you have encountered or heard of similar things, welcome to discuss.

I think it is very unethical and dishonest.

 

[FredMercaldo]

For example:

A broker comes to inquire about one of your domain names and closes the deal for $5,000 (and takes your 20% commission)
In reality, the buyer paid $10,000 for the domain
You end up netting $4,000 and the broker gets a $5,000 difference and a $1,000 commission.

Several friends around me have personally experienced this kind of thing. After the transaction was completed,
They found the contact information of the buyer, contacted the buyer and learned the amount the buyer finally paid for the domain name, and found that they were scammed by the broker.

This may be the rule of the game in the domain name industry.

May I ask if you have encountered or heard of similar things, welcome to discuss.

Not going to mention any names here, as both proposed seller and "broker" have apologized to me. But I was offered a name for $25,000 that the broker has received a directive from the seller to approach me at $5,000. Not cool, funny story about how I found out about it, I confronted both parties after I found out (seller was upset also) and no harm other than to the brokers reputation. I didn't buy it.

 

[william]

Use only trusted brokers. If they betray your trust, share it publicly. This is definitely extremely unethical and should not happen. A final transaction should definitely be visible to all parties.

The only situation where this would be okay in my opinion, is if someone finds a buyer themselves, contacts you as a buyer (not broker) and flips the name. Whether it's done in the initial transaction or a subsequent transaction wouldn't matter. In any other case it's dishonest and fraudulent.

 

[pb]

A company comes to a domain broker to help them buy a domain. If it's a big company, they may be afraid that contacting the seller directly would drive up the price expectations. They reveal their budget to the broker and trust they will negotiate accordingly. The broker then sends a lowball offer to the seller and slowly works towards the target, eventually securing the deal at half the budget. What will happen next? A decent human would close the deal at the agreed-upon price, take their commission and walk away. But greedy human will take the whole or maybe 90% of the budget from the buyer, pay the seller the negotiated amount and keep the difference, effectively scamming both sides. So it's important that not only sellers, but also buyers are aware of these practices and avoid dishonest "brokers".

Maybe the best course of action is to use services like escrow.com who show all the amounts (amount due, payout, commission, brokerage fee etc.) to all sides of the transaction.

 

[FredMercaldo]

GOOD FOR YOU!!!

If the broker worked for a company, hopefully the company they were associated with was duly informed. You could share how puzzled you were about the broker using such creative selling tactics!

Perhaps that broker would be more suited to flipping burgers rather than domains?

There was another incident a year later. I severed ties with the broker; stayed with the registrar, and the broker apologized and stopped what he was trying to accomplish, which was enter into a very competitive venture against one of my main businesses. I understand now that their corporate counsel demanded that the incident "go away." I had no desire to get the person terminated or sue the organization; but just a real eye opening experience.

 

[domainicate]

ITS CALLED FLIPPING ,SAME AS WITH HOUSES ,THEY CAN SAY WHATEVER THEY WANT TO YOU ,BUT BUYERS REALLY DONT CARE

If a real estate broker did this, it would be unethical. It's all about being up front and disclosing. No seller would sell through a broker for half of what the buyer is paying. Any "broker" who does this is unethical.

 

[karmaco]

Its a form of front running and one reason many do not trust brokers or third parties to buy their domains.

Regular domainers do things like this as well which is more ethical than brokers pocketing from both ends.

Tell your friends when in doubt not to sell cheap when a broker comes calling.

 

[branding]

it would be unethical to represent both the buyer and seller in such a way as you cannot negotiate two clients against each other for the best financial outcome for both.

Mind you, depending on where you are located, this could not just be unethical but illegal.

 

[pb]

That's not a domain broker, just a crook in a broker's disguise.

 

[mr.mu]

Exactly!

Thank you for bringing this up. In researching brokerage issues, Escrow.com clearly presents an OPTION of having full transparency.

Escrow is a trusted platform. I like it, It guarantees the transaction safety of participating parties and charges extremely low commissions.

But for those domain name broker platforms that charge high commissions, it is hard to say whether they will be greedy enough to cheat buyers and sellers.

They have participated in the entire process of domain name negotiation and transaction, and have complete control over the entire transaction. If they want to scam buyers and sellers, it is very easy to operate.

 

[mr.mu]

What did your friends end up doing?

There is nothing my friend can do except stay away from this company's broker.

Another point here is who the brokers are, and with whom they claim to be affiliated.

In fact, this kind of thing is inevitable, we can't change the rules of the game.

What we can do is to avoid such unpleasant things as much as possible, as lock said:

handling own lead or negotiation.

Public and clear pricing may also help to avoid this thing.

 

[topdom]

I think it happens all the time. We may be paying 2 or more commissions in most sales. Because endusers contact "trusted" companies, and let those middle guys handle everything. And this is why big marketplaces hide buyer info.

 

[EarthWindFire]

Hard to know who to trust when you have some brokers front running and triggering udrps (Lumis), some getting scammed when trying to charge crazy million dollar commissions (vpn.com) and others working with those scammers at Epik like Saw.com

 

[magnificentdomains]

No, I have never encountered this. When a broker reaches out to me they have connected me directly to the buyer, we then close the deal and when the transaction is finished I wire the broker his commission. There have also been times when the buyer and myself split the brokers commission. In both cases I am in direct contact with the buyer and the sale amount is fully disclosed to all parties.

 

[John and Jenny]

I've heard there are brokers who take commission from both sides - sell & buy.

Isn't that unethical?

 

[LoveCatchyDomains]

agree.

"With more transparency we can stop questioning" - Einstein ?

Exactly!

Maybe the best course of action is to use services like escrow.com who show all the amounts (amount due, payout, commission, brokerage fee etc.) to all sides of the transaction.

Thank you for bringing this up. In researching brokerage issues, Escrow.com clearly presents an OPTION of having full transparency.

 

[mr.mu]

ITS CALLED FLIPPING ,SAME AS WITH HOUSES ,THEY CAN SAY WHATEVER THEY WANT TO YOU ,BUT BUYERS REALLY DONT CARE

Buyer probably didn't care how the money was split between broker and seller. But seller need to care about this, after all most of the profits are stolen.

 

[AEProgram]

It happened quite a few years ago, and realize that the broker was probably simply trying to be helpful for me. My hope is that the broker did actually act in good faith, an honor my commitment to what I felt was a fair price for the sale.

My point here is that more transparency might be extremely helpful in improving trust in brokerages.

agree.

"With more transparency we can stop questioning" - Einstein ?

 

[LoveCatchyDomains]

In my opinion, this is not a scam, it's no different then if the broker made you an offer directly for the domain, you accept their offer, they purchase it and then turn around and sell it to the buyer whom they procured.

When a potential buyer signs on to a brokerage, and pays the brokerage fee, are they alerted to this possibility? That, in some instances, they could potentially pay much more than dealing with the buyer directly?

This happens every day in the Sedo and Afternic Fast Transfer Networks. Look up any of your names at the secondary registrars in these networks and chances are your names have an extra few hundred to a few thousand dollar premiums added to them.

Please note that the brokerage is a very different issue from the variable open, public network pricing. Isn't the concern here about the not so transparent pricing behind the scenes. Someone that hires a broker would reasonably presume that they would act in their best interest.

for a public example of the inherent problems of "dual agency". See the response in the lawsuit:
https://www.courtlistener.com/docket/63559525/vpncom-llc-v-george-dikian/

Wow! That's a very disturbing case. Thanks for sharing the court documents.

 

[LoveCatchyDomains]

There was another incident a year later. I severed ties with the broker; stayed with the registrar, and the broker apologized and stopped what he was trying to accomplish, which was enter into a very competitive venture against one of my main businesses. I understand now that their corporate counsel demanded that the incident "go away." I had no desire to get the person terminated or sue the organization; but just a real eye opening experience.

That was very kind of you, to not have the desire to see the broker terminated. The question is whether that individual will harm others who aren't are savvy as you are.

Hopefully, the registrar put the necessary oversight to prevent this from happening again.

 

[lock]

Sell then complain and prove if the case or try hosting the domain and dealing with own inquiry. I dislike when should have earned from own lead especially when parking the domain with a broker. A broker has to earn but a marketplace that you pay shouldn't intervene holding back when the domain brings the lead. The loss would be not handling own lead or negotiation.

 

[LoveCatchyDomains]

Yes. Once, after receiving a phone message, I had left a phone message that I was willing to sell for $XXX. The broker subsequently called and indicated that the buyer's budget was twice that much. From the standpoint of integrity, since I had agreed to sell it at the lower price, I indicated my willingness to still do so.
In retrospect, I could have, and perhaps should have demanded $XXXX amount.

I've always wondered whether the broker went ahead and charged the full amount anyhow for the buyer. I don't recall ever seeing an invoice for what the final price of the sale was. I simply receive a check for my side of the sale.

One point that would increase trust in brokers is an accounting trail, to see that the actual price paid by the buyer is in line with what the seller has received.

 

[domainicate]

Yes, but even if you are an Eagle Scout and priest or imam, how can both parties be absolutely certain you are acting with integrity.

Would Escrow.com seems to be one of the best options to add, to allow for actual third-party independent verification? Or do you somehow manage to make the "honest transaction reassurance" some other way?

I guess I should have said that, but for me, it was a given that broker transactions go through a third party escrow service. My current choice for escrow is escrow.com.