When to Think Twice About Offering a Payment Plan

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Two years ago, I was presented with a mid six figure cash offer to buy one of my domain names. The catch was that just 10% of this would be paid immediately, and the remainder would be paid in installments over a couple of years. This was a solid offer, especially since the initial payment would not be refundable.

After considering the offer, opted to decline it because the planned usage of the domain name made me uncomfortable. Pierluigi Buccioli, an investor in gambling domain names, shared his thoughts on why he doesn’t like to offer payment plans for his gambling domain names, and his rationale is along the lines of mine:

I can’t tell you how many times people have emailed me about domain names I own that are similar to domain names operated by others. Their confusion about a credit card charge or product defect can be a time suck, but it is usually fairly easy to direct them to the right place. When people have emails, receipts, and other material pointing to your exact domain name, though, that is different. Good luck easily explaining to someone that the domain name was used by someone else and you had nothing to do with however it was previously used. This is especially true if lawyers get involved because money is at stake, and you need to hire your own counsel to respond.

A payment plan deal can be a great source of ongoing income, but people should keep in mind the potential for blame if the domain name is used in a way that can harm its goodwill. For sensitive types of domain names, it might be a good idea to disable installments if you want to protect yourself from getting into a situation like what Pierluigi described.

4 COMMENTS

  1. Best way to deal with it is that the domain is wholly “own” by Dan and let them do the talking.
    The domain will be in the Dan’s escrow and let Dan deal with it.

  2. I thought that when the domain is in the “offering the Payment Plan”, the domain is temporarily transferred to Dan as collateral and when the all the payment is being made, Dan will officially transfer to the new owner.
    For the time being, I just collect the payment and let Dan deals with all the transactions.
    When the payments are not being made, then the domain is transferred back to the me.

  3. How’s this any different from a landlord-tenant relationship with physical real estate? Tenants run scams out of retail storefronts all the time and then bail on the customers and the landlord with the landlord left to answer any questions of the tenants whereabouts by angry customers. Doesn’t mean that the landlord should give up his or her landlording business. It all just goes with the territory of leasing space to tenants for a time.

    • There’s a massive difference, and I will try to explain:

      With a landlord who leases space to a scammy operator, a person who was defrauded wouldn’t assume the landlord was running the scammy business in the location nor would the person easily be able to get in touch with the landlord. In addition, if the landlord leases the space to someone who uses it to sell counterfeit Chanel and Hermes purses, someone who is defrauded would not assume the tenant selling cupcakes a couple months later was one and the same. I lived in Manhattan for 10 years, and I always assumed the storefronts were all leased from landlords and were not owned by the tenants due to the cost of real estate. Simply, I would not blame the landlord if I had an issue with the tenant.

      With a domain name, though, the domain name is the brand. If I lease a domain name to someone who defrauds people, they don’t really have any way of knowing that the fraud was done by a third party and not the domain owner. Further, people who had a bad experience might write bad reviews or file litigation. All of that would make the domain name more difficult to sell, not even considering the potential for having to hire counsel to turn away the litigation targeting the domain owner.

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