My business model involves the re-sale of domain names. Oftentimes, I will buy a domain name on a venue like NameJet, and after I won the auction, paid in full for the name, and have it in my possession, I may seek out an end user buyer via resale of the domain name.
This morning, I sent out some emails to end users about a domain name I recently won at auction. A few minutes after my first email went out, I received a reply asking me how much the domain name would cost. After sharing my price, the prospect emailed me back asking why my price was higher than what my “colleague offered a few days ago.”
Since I don’t have any co-workers or employees, and since this was an expired domain name rather than a private auction, I am pretty confident someone did some frontrunning on the domain name. This involves sending out emails asking potential buyers if they are interested in the domain name, and if they work out a price that is higher than the auction price, they will buy and then re-sell the domain name. If not, they won’t bid on the domain name (or won’t win the domain name).
I am pretty sure that selling an asset that is owned by someone else (in this case, probably Network Solutions), without their permission, is illegal. Legalities aside though since that isn’t my field, I am completely sure that this is unethical.
This person had no right to try and sell a domain name owned by another company, and he or she has no control over whether or not they can follow through with a deal. If they agree to sell a particular domain name for $5,000 and the auction ends at $10,000, I assume they aren’t going to be the winning bidder and take a loss on the sale. They will probably disappear into thin air with their made up throw away email address.
As far as I am concerned, frontrunning is a scumbag move made by someone who doesn’t have the courage (or quite possibly the financial means) to invest in a domain name without having a buyer lined up.