Fast transfer networks are great, but how to prevent edge cases of mistaken sales?
A lawsuit against GoDaddy’s Afternic is a cautionary tale of automated fast transfer sale networks.
Premier Shield Insurance sued Afternic (pdf) earlier this year after it claimed that Afternic sold one of its domains through Afternic Fast Transfer without its permission. The insurance company said it listed many domains for sale through its GoDaddy dashboard but not the one at issue, which it used for its business. It claims significant losses after losing access to its domain.
The insurance company listed its domains through GoDaddy’s List for Sale feature. This tool enables registrants to list domains for sale without creating a separate account at Afternic.com. The tool has generated hundreds of thousands of new listings of previously latent domain inventory.
The List for Sale feature at GoDaddy should be a win-win. It helps people potentially make money from domains they’re no longer using and makes these domains available for easy purchase by the general public.
But it can go wrong. End users listing their domains for sale are not as sophisticated about domains as domain investors. Many use domains for their businesses, and they could accidentally sell a domain they depend on.
There are two scenarios where I could see an automated sale tripping up the casual user. One is when they accidentally list a domain they are using for sale. (To be clear, Premier Shield claims it didn’t list the domain at issue for sale.) The other is if they list a domain for sale and then subsequently use the domain for a site. They might forget that it’s listed for sale.
So how do you prevent these edge cases? GoDaddy should implement a combination of reminders and nameserver monitoring/blocklists.
I’ve previously suggested that GoDaddy send a reminder email to sellers each year about which domains they’ve listed for sale. That wouldn’t have prevented the sale in this case because the sale came less than a year after the domain was added to Afternic Fast Transfer.
But in this case, the domain in question pointed to ns1.bluehost.com. It’s rare that a domain would point to BlueHost without having an active site. GoDaddy should either not allow listings through its control panel for domains that point to major hosts, or it should trigger a second level of approval.
It could do the same for domains pointing to GoDaddy’s DomainControl servers. Many domains that point to these servers are parked, but it could run a quick check to verify that it doesn’t resolve to a website.
Afternic already watches domains for registrar transfers to remove domains from Fast Transfer. It should also apply this to domains listed for sale that have a nameserver change. A nameserver change could mean a site has been developed if the domain is listed by an end user through their GoDaddy account.
Perhaps Afternic should periodically check nameservers to clean up its inventory. If a domain is on a parking server, it’s a good sign that the domain is for sale. If it suddenly points to ns1.bluehost.com or another known host, that likely means the domain is no longer owned by the person who listed it or they don’t want to sell it anymore.
What happened to Premier Shield is an edge case. Many good things come from Fast Transfer, and I believe many great things come from GoDaddy making it easy for people to list domains for sale. But the company should do what it can to prevent these edge cases from happening.