Just about anyone can list a domain name for sale on various domain name aftermarket websites. If the seller can prove he or she has possession of the domain name, there isn’t much an aftermarket website can do to prove otherwise. This makes it somewhat easy for someone to list a stolen domain name for sale.
Before buying a domain name, whether it is a private sale, aftermarket purchase, or even an auction purchase, domain buyers need to do their own due diligence on a domain name’s history. If it turns out the domain name was previously stolen, the person who bought the domain name may be out of luck, with the payment lost and the domain name taken back.
If a domain registrar is able to recover the domain name on behalf of the legitimate registrant or if a court orders the domain name returned to the rightful owner, the person who bought the domain name may lose money and the domain name. I am not a lawyer or legal expert so I won’t opine on how important possession is in the case of a stolen domain name, but I wouldn’t want to be the owner of a stolen domain name or someone who flipped a stolen domain name.
Doing due diligence can be time consuming. I generally use DomainTools’ Whois History Tool to get a really good idea of the provenance of a domain name. Oftentimes, it requires expert knowledge to detect something fishy, like a subtle email change or strange transfer.
I don’t think we can expect a domain aftermarket website to be able to research every domain name on its platform, and I don’t think any platform would guarantee all domain names are rightfully owned by the seller. As such, the burden of doing due diligence belongs to the buyer, and it’s important to be thorough.
None of us want to develop or re-sell a domain name that was stolen and unlawfully re-sold, and doing due diligence is one way to prevent that from happening.
I saw that Theo published something similar last week. I think he offers so good advice as well.
Yes one more thing to note is buying a domain in any of the premium auction sites which allow backorder of domains. There is no guarantee that even after the domain has been transferred to your account, it will stay with you. It might sound surprising but I have faced that. I bought a domain at an auction at a leading aftermarket site. I finally won the auction, payment transferred to the auction site, domain transferred to my account at a leading registrar. All was smooth and I was quite happy with my purchase. I made a logo, got my business cards printed for that business and began developing the site. Then suddenly one day I got a notice from the auction site, that the domain is being taken back by them as the previous owner wants it back! Can you believe it? As the domain was under the no-transfer clause as it was just under 60 days the registrar took back the domain and transferred it back to the old owner! I had even contacted ICANN in this regard and all they did is referred the case to the registrar who say that it was legally transferred back to the old owner as he decided to renew the domain. Now my question is once a domain is transferred to how can the previous owner claim ownership? I have still not been able to figure that out, but the auction company as well as registrar say that if you read their terms and conditions it clearly states that the domain can be taken back before auction, during auction and after auction. Now the first two are understandable but after auction? And after a transfer takes place to the new owner? Hence, I have stopped participating in auctions after this issue and I wish someone shed some light as to how such a thing is possible and if someone has faced something similar.
@CN: Godaddy?
@Josh – no not GD. GD has been great and I have bought a few domains via them and not an issue. This is another leading auction site through which I faced this issue.