If you've ever researched a domain name that you wanted, but waited to register it only to find out a day or two later that it's been claimed by some mysterious company, read on. There are some shady players who are running a domain name registration scam that tries to buy the domain names that you want so they can sell it back to you at exorbitant rates. This isn't the old practice of cyber-squatting that was common in the boom years. This is far more pervasive.
Here's my scenario. A client of mine wants a domain name that's about to expire and re-enter the public domain in a few days. She gets offers from "domain acquisition specialists" to get the domain for her for a minimum of $200. In some cases, these "specialists" actually can come in handy if you're competing for a very popular domain name that will be getting released back into the public domain. In most cases that I've encountered, domain names these days are so specific that the market for your average domain name is limited. Chances are that there aren't many people who want to buy a name like "willworkforsocks.com" away from you.
This was the case for my client and I advised that we just wait it out and pick up the domain at regular price. When the domain did become publicly available, I was shocked to discover that it had been registered by a company going as "DOMAIN DOORMAN". A little research on this company also yieled many aliases and a series of websites for these companies that all looked similar except for some color changes and different logos. Each time I'd search on one of these companies, I'd find countless people complaining of having domain names stolen from them. A lot of them had done research into available domain names online, but waited a few days to register them. When they went back to register, their domain name was already registered by Domain Doorman or an alias company. A lot of these people suspect that their online interactions were snooped upon or stored for data mining because their domain names were so unusual.
I'm not much of a conspiracy believer, so I'm still a little skeptical until I ran into a blog entry by Bob Parsons, the CEO of GoDaddy, detailing something he calls the "Add/Drop Scheme". In this scheme, a domain registrar services company can take advantage of their position to register hundreds of thousands of domain names that they think someone will want. They keep these domain names for five days because they can get a full refund from the central registrar if they return the domain name within five days. Within the five days that they hold the domain name, they're hoping someone will be desperate enough to negotiate with them to get the domain name. People were reporting asking prices that started around $1000. One guy said he negotiated down to a few hundred dollars.
According to Bob Parsons, in the month of March 2006, close to 30 million domain names were registered. Of these registrations, less than 8% were retained, meaning that roughly 27.5 million of these registrations were likely fraudulent.
The good news here is that if you run into a similar scenario, if you wait a few days, the domain may become available again. The worst thing you can do is contact the company that registered the domain away from you, unless it's a legit business that has legitimate use of that name. Wait a few days before you take your next step and if it's available, don't piddle around. Register it before it can happen again.
If you want juicier details about this Domain Doorman company and the schemes that they run, someone set-up an expose' site on them at http://www.domibot.info.
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