Why Issue of "Claw Back" Domain Names is Scary | DomainInvesting.com

Why Issue of “Claw Back” Domain Names is Scary

14

Domain Incite and TheDomains have reported on the retrieval of some new gTLD domain names that were sold by registrars and in the accounts of domain owners. This is something that all of us should keep in the back of our minds when investing in and/or developing gTLD domain names, as I assume this is covered in the terms and conditions we agree to when registering domain names.

As someone who frequently buys domain names in private and who prefers to quickly re-sell domain acquisitions, the primary issue I thought about when I read this news is the implication of what could potentially happen if the original buyer had already flipped one of the domain names, and a domain name was retrieved from the account of an aftermarket buyer. Unless the seller refunded the buyer because of this issue, the buyer would be out of luck. In a situation like this, I would hope the seller would give a refund – I know I would without question, even though the claw back was not my fault.

Another issue is what happens in the event someone develops a website on a domain name that was taken away. Someone commented about that on Mike Berkens’ article, and as time goes on, I could see that becoming a greater issue. If there is a risk that the registry could take back domain names, it’s something to consider. My bet would be that this is a one time occurrence, but if the potential is there, it’s another risk that needs to be considered.

I am not a lawyer and won’t speculate on legal responsibility or liability in a case where a re-sold and/or developed domain name was taken back, but that is another consideration that needs to be made by domain sellers and developers.

One thing I plan to do with the 3 new gTLD domain names I have listed for sale is take them down from third party aftermarket websites, and if I do end up selling them privately, I will have my counsel draft something to protect my interests in case of a clawback. I’ve owned the names for a few weeks, so I assume I am in the clear and have no worries, but you know what they say about people who assume things.

Hopefully, this is a one time issue based on a glitch, but domain investors who intend to sell their domain names and developers who intend to build their domain names need to be aware of the potential trouble this could cause.


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


Reach out to Elliot: Twitter | | Facebook | Email

Comments (14)

    page howe

    well said Elliott, my first thought when i got the message on the claw back was did i resell any of them, and if was with sedo, given the “specific performance” clause, id be in no mans land. The registry and the registrar have their agreements and they can do what they did here, just take em.

    Page Howe

    March 12th, 2014 at 11:43 am

    Kevin Murphy

    What happens to people who assume things?

    You’re confidently asserting that we already know, but I do not.

    http://xkcd.com/1339/

    March 12th, 2014 at 11:56 am

    Aaron Strong

    The more I get familiar with domain investing as an industry, from an entrepreneur’s perspective, the more I continue to be disappointed. It is already a difficult industry to penetrate when industry veterans blog and comment non-sense and then attack the character of those they disagree with….. Now this “claw back” thing…..Are you kidding me?…..Combined, these issues continue to take people and money out of the domain investing industry. Money will be spent elsewhere and not in domains. It is time the industry veterans and professionals stop attacking domain investor’s they disagree with and start concentrating on the real issues that is holding everyone back from true potential……..

    March 12th, 2014 at 12:12 pm

    Ron

    This is what happens when you launch without doing due diligence, and having the proper checks, and measures in place. ICANN should have never allowed them to accelerate the launch priority.

    As long as everyone is getting paid, who really cares right?

    Unfortunate innocent people had name purchases reversed on the drop of a dime, I would hope they would have some legal recourse as a group to be compensating for out of pocket losses.

    March 12th, 2014 at 12:13 pm

    Twice Nice and Always Right

    That sounds like a miserable experience ; They can keep the experience.

    March 12th, 2014 at 12:34 pm

    Horizon

    Well,this is my view from real world experience.If you buy a car from someone(in this case a domain from a registar)and the “title isn’t clear,and on sell that car to someone else,YOU are responsible for the “unclear” title to that car,and the innocent third party can get their money back off you,or sue your a$re off.You have to get,if you can,your money from the 1st party,and sue for losses.ie profit from a potential sale etc.

    March 12th, 2014 at 12:54 pm

    Horizon

    Oh forgot to add,sue the first party,because you brought the car,domain ect IN GOOD FAITH.

    March 12th, 2014 at 12:56 pm

      Elliot Silver

      “sue the first party”

      Litigation is expensive, and if the seller is willing to give you a refund, I would imagine other losses are very small and/or difficult to calculate. Also, money aside, I think I would find it difficult to file a lawsuit against a colleague given the circumstances.

      In any case, it’s good to know that this happened and could happen.

      In reply to Horizon | March 12th, 2014 at 1:00 pm

    Horizon

    I agree Elliot.I was just trying to articulate it with a couple of experiences I had many moons ago.Also don’t forget we have to “trust” the registries in the first place,to be able to buy from them don’t we?Anyway I lost over 100k then and you don’t forget that,and I never got any money back from the 1st party.Anyway it really in a nut shell,just makes the registries look sloppy and not in control of their own businesses.

    March 12th, 2014 at 1:13 pm

    Ron

    Does anyone know the scope of the registry being able to take back any domain, and the given time period, it seems like with the thousands of pages of documents, the most simple rules in place are lost. I feel there was more direct information given back in the 90’s than there is in 2014, after millions have been spent in legal fees. At the end of the day you essentially have no rights. IF Donuts sees a domain sell for $100K in the GTLD aftermarket, will they take it back, and ask the buyer to come pay them directly, where does it end? To much power, to quickly, ICANN is to busy counting the dollars coming in, to care about underlying issues with the registries appointed to issue these domains.

    March 12th, 2014 at 1:27 pm

      Elliot Silver

      I think in this case, it was clearly an error and not simply them taking back names they felt they could sell for more.

      In reply to Ron | March 12th, 2014 at 1:29 pm

    Patrick Hipskind

    There have now been two sizable mistakes that are going to start turning domain investors away – Donuts just had this launch mistake, and many domain investors were unhappy about not getting .sexy domains they pre-ordered.

    I think the registries need to take decisive action to assure domain investors that their investments will be protected, and not taken back arbitrarily. The registries need to have updated posts on their websites that keep domain investors in the loop going forward. If they don’t take a more proactive approach moving forward, I believe you will see a big drop in registrations. It could be the poison water that kills the .horse.

    March 12th, 2014 at 2:01 pm

    Paul Neilson

    Had several .directory names purchased immediately refunded by enom thought maybe they liked them more but guess they were clawedback as the purchase was being made… interesting…

    March 13th, 2014 at 1:59 pm

Leave a Reply

Name *

Mail *

Website