Namebio reported that Calor.com was sold for $20,440 at GoDaddy Auctions this past March. According to a lawsuit filed in Arizona, the winning bidder did not pay, giving the opportunity to an underbidder who reportedly completed the purchase for $11,427.17. Two months after completing the purchase and receiving the domain name, GoDaddy reportedly removed the domain name from the buyer’s account after proceeding to use the domain name. The buyer filed suit to regain control of the domain name.
As a domain investor who often buys domain names to re-sell, this is always something that has worried me regardless of the auction venue. This situation sounds similar to what GoDaddy referred to in the past as an “edge case” where a domain name was won in auction and was later removed from the account of the buyer due to an error.
My fear has been that I win an auction, and I re-sell the domain name to another buyer. At some point in the future, GoDaddy or other registrar related to an expiry auction platform where I bought the domain name removes the domain name from that buyer’s account due to an edge case situation, and that buyer comes after me. That would put me in a difficult position – another problem would be if the buyer has already started to use the domain name for a business or made plans to use the domain name.
Fortunately, an edge case situation like this seems to be very rare, as I don’t hear of this happening often. However, the ramifications of a situation like this could be severe, particularly if the buyer of the domain name has utilized it for a business or has sold it to someone else.
At the present time, it does not like like the defendants in this case have responded to the litigation. I am told GoDaddy has an arbitration clause in its agreements with auction participants, so I wouldn’t be surprised if the company tries to get this case dismissed in favor of arbitration.
I will keep an eye on this to see what comes of it.
I read your previous post from 2021 in trying to understand “edge cases” better. I understand the issues, especially in a death situation, but in other industries, in the event property taxes aren’t paid, or car payments….there are repercussions I strongly believe that once a domain is listed for sale….it becomes available…period. If it is still in some sort of redemption period, it should not be listed.
Now, since most names are bought by domain investors at auction, I believe the best thing GoDaddy should do is appeal to the new owner to sell back the domain to the original owner, and explain whatever hardship that occurred that made them default. They could even decide to resell it back with a profit….but it should be the option of the new owner. All domain owners need to have family members and business partners aware of passwords and access in case of an illness or worse. As you state in your article Elliot, any of us could be put in a horrible situation in the event we “win” an auction and quickly resell it, only to have it “repossessed.” Not cool.
In the case I wrote about from 2021, Joe Styler wrote, “The original owner did renew it. ” I don’t know and can’t explain the circumstances that led to the domain name being auctioned.
Per ICANN when a domain changes ownership there is a 60 day waiting period before ownership can change.
Did the original winner decide to come up with the full amount – $9K more than the 2nd highest budder ?
Does GoDaddy think they can put it back in auction and get more than the $11K from the second highest bidder ?
Are those grounds for what GoDaddy did ?
Hopefully John Berrymore or another domain attorney can chime in.
I don’t think so.
Interesting. Great point Elliot. Indeed, keep us posted for any updates, here and on Linkedin.
So I bought a domain and has 60 days warranty and can return it ..wow good deal
Well said BullS.
Damn I have probably $200K in domains I would have liked to return after being the top bidder going years back
FYI
If you hand reg domains like I do all the time ,you have 7 days to remove it and get money refunded.
All my hand reg domains are excellent traffic $$$maker at squarely.com
Now you know…
They did this with me with Mexico.org. Couldn’t do anything.