An interesting situation has been brought to light in recent times with regards to Registrars drop-catching domains for new clients.
With Drop, if anyone (new or old) who has an approved account wins a domain name on the drops, they become the registrant. And the registrant contact email address is whatever they nominated.
With Netfleet, a new client becomes the registrant – however the registrant contact email address now goes to a default email address of firstname.lastname@example.org. It automatically changes to the registrant’s email address when they have paid for the domain. (Long established client accounts are not affected by this. As with any business, some clients have their own terms of trade in place).
The other dropcatcher Domain Shield has now adopted Netfleet’s practise.
I wasn’t sure whether this “email@example.com” was actually permissible under the auDA policy, so I asked a couple of other registrars and they said “technically no”. An initial phone call to the auDA received a similar response.
This is the actual policy; and the relevant clauses are below:
4.2 Registrars and resellers are not permitted to use their own contact details as registrant contact information, unless they have received express written consent from the registrant in that regard.
4.3 Where a registrar is notified by auDA that a reseller is using their own contact details as registrant contact information, without express written consent from the registrant, the registrar must update the registrant contact information to be compliant with this policy.
So I then spoke with Jonathan from Netfleet, and he told me that Netfleet had sought permission from the auDA back in September last year. They had done so due to some possible fraudulent activity by newly signed up accounts. He said that Netfleet received written consent to do so, provided that clients had agreed in writing to these terms and conditions.
I rang my original contact at auDA again to try and get to the bottom of the matter. Given that I was going to be writing about the situation, they suggested I put my request in writing to get an official response. I have done so today.
I can totally understand (and empathise) why drop-catchers would want to protect themselves. After all, they have invested huge sums of money into developing their platforms. Nothing would be more frustrating than a “newly minted account” winning a domain or domains and then not paying for it / them.
(Bear in mind that currently it is easy to sign up for an account on Drop and Netfleet. People can choose any name they want; perhaps “borrow” an ABN to establish eligibility; use a throwaway email address; and pay the initial fee on a supermarket debit card that perhaps has $50 credit on it).
Even more frustrating would be when that “new client” wins a domain and then transfers it out to another registrar. They then sell it on to a 3rd party. The dropcatcher is then basically stuffed. What a scam that is. And I know from talking to Drop and Netfleet that this has actually happened.
This type of conduct also affects the general integrity of the marketplace. Imagine if you were the underbidder on a domain, and a “new client” wins the domain and doesn’t pay for it. Frustrating!
So I totally support dropcatchers taking whatever legitimate steps they can to stamp out unwelcome practises like these.
Questions That Come To Mind
Obviously there are some issues that arise from this. Here are a few that I can think of.
- If a “new client” doesn’t pay, what happens to the domain?
- If an offer comes in on the domain immediately after auction, this would obviously go to (say) firstname.lastname@example.org. Does Netfleet pass this on to the “new client” (or would they)?
- Does it get awarded to the underbidder after a period of time? (Though I can see massive problems with that strategy in a sealed bid environment).
- Or does it get deleted after say 30 days and go back on the expired auctions? This could be potentially very unfair to the original dropcatcher if they don’t win it the second time around.
- Or could the dropcatcher act like a “mortgagee in possession” and auction the domain privately after a period of time?
I’d be really interested as to what others think about this situation.