Panel discusses ethical questions for brokering domain names.
This morning at NamesCon Online, domain broker Tessa Holcomb led a panel of domain name industry professionals in a discussion of domain brokerage ethics.
Participants included Bill Sweetman of Name Ninja, Jeremiah Johnston of Sedo, Clara Wade of Escrow.com, and Daniel Adamson of GoDaddy (previously with Uniregistry).
Some of the panelists discussed situations in which a client made them uncomfortable and they had to push back. Sweetman, who primarily represents domain buyers, explained a situation in which a domain buyer wanted him to threaten the domain owner in order to get the desired price. Sweetman fired the client.
Wade, who is an account manager at Escrow.com, said a broker wanted to send her bitcoin as a token of appreciation for her help. She politely declined because it wouldn’t be appropriate as a neutral third-party in transactions. It could have led to a perception issue or a request for a quid pro quo down the road.
Holcomb asked the panelists about a recent question that popped up on twitter: is it reasonable to ask your domain broker to send the email communication they had with the potential buyer/seller?
Johnston explained that this could make the broker uncomfortable. In a lot of cases, the broker has a relationship with the other party and might be discussing other things with that party that wouldn’t be appropriate to share.
The panelists seemed to agree that it comes down to trust. If you’re asking your broker for a copy of the email communications, then there’s probably an underlying trust issue at play that should be addressed. Are you concerned they are doing something unethical or not in your best interests? If so, you might need to find a new broker.
The session also covered stolen domains. Wade explained some of the red flags they look for to determine if a domain is stolen. Some include the party refusing to sign a purchase or sale agreement, and she also cautioned against parties that decline to use an escrow service. She discussed one situation in which picking up the phone and calling the party helped unravel fictitious information.
Johnston noted that it’s a lot harder to do ownership history research than it used to be because of GDPR and private Whois records. It’s not as simple as real estate, in which there are definitive records of ownership. Sometimes, he said, you do your best due diligence but still have to take a risk on a transaction.
The panel did not delve into some of the seedier things that domain brokers do. I’ve heard about domain brokers telling another broker that they have a buyer for a domain the broker is representing, and then turning around and pitching the domain to their clients. They are frontrunning domain sales, trying to find a buyer before sending funds for a purchase.
There are also, sadly, domain brokers with criminal records or histories that should give domain owners pause. And, if your broker says he or she will act as escrow, you should probably find a new broker.
Here’s one I’ve seen recently.
A broker is engaged by a buyer to purchase a domain name. The domain name is exclusively represented by the seller’s broker.
The buyer’s broker demands that the seller’s broker spilt the sales commission with the buyer’s broker, despite the fact that the buyer’s broker is already being paid a commission by the buyer. The buyer’s broker does not intend to disclose that commission split to the buyer.
The seller’s broker refuses to split the commission.
The buyer’s broker then informs the seller’s broker that the buyer will be informed the domain name is not for sale – effectively lying to their customer.
That buyer’s brokerage, incidentally, is well represented at Namescon.
That’s dirty. And now I’m going to try to figure out which brokerage it is
There is only a handful of buyer brokers.
Just about every seller broker will work as a buyer broker if the opportunity comes to them.
Wow!
Who is that broker?
Just so there’s no doubt whatsoever in anyone’s mind, the buyer’s brokerage that John Berryhill commented about is *not* Name Ninja. Also, I do not know who the buyer brokerage is.
It’s shocking and disappointing to hear that a buyer broker would behave in the unethical manner that John describes. Unfortunately, we work in an industry where anyone can call themselves a “broker” with zero training, experience, or (in this case) ethics.
It’s also baffling behaviour on the part of the buyer broker, since they are deliberately (out of misguided spite, perhaps?) ruining their chance of getting a deal completed and earning their broker fee.
So very wrong on so many levels. Ugh. As an industry, we can and should do better.
Still liking Mr Berryhill more and more.
That is SO disappointing to hear! Do you all feel that fees should be paid on BOTH the buy and sell side? When acquiring a domain for a client (I’m actually currently in the process of wrapping one up) and dealing directly with the owner / seller, my fee is paid by the buyer thus allowing me to get them the lowest price possible on the name. If it turns out that the owner is being represented by a broker, I arrange to split one fee with that broker (whether it’s paid by the seller OR the buyer) in an effort to get both parties the best deal possible. I don’t believe in double-ended commission because, no matter how you slice it, someone (either buyer or seller) is either paying more, or receiving less, than they should be. That’s my opinion.
It’s really not even a question about how the commissions are divvied up. Whatever consenting adults agree to do is usually fine. Even better if they invite me.
The issue in the practice I described which, yes is sadly true, is that the buyer’s broker is attempting to earn more than has been disclosed to the buyer; and then lying to their own client by falsely stating the domain name is not for sale if the seller’s broker doesn’t share the commission on that end.
That’s not a matter of ethics. That’s wire fraud.
I’m reasonably confident that the firm in question is likely to read these comments. They know who they are. I know who they are. And if they continue that policy, I want to assure them that if they believe their employer is going to somehow shield or protect them from criminal liability, they are very mistaken.
To be clear, if your employer asks you to engage in a criminal act, and you do so, it is not the same sort of situation as if you had an accident with the company delivery truck.
(and by “you”, I certainly do not mean you, Tessa. You may borrow the keys to the truck anytime.)
John’s dropping more clues here…more than a one man/woman shop. We know it’s not Tessa. Not Bill.
Can you tell us who they are?
So we don’t do any business with them.
2 down.
Place your bets its a 3 horse race?