Like any market, the domain name is not immune to fraud in all its forms. And as often is on the secondary market - more media - that have shone the spotlight. Even if the initial contract has not been spared so far with - to name but a few - the problem of theft of domain name holders and side of front running at registrars. Incidentally, since I was asked several times recently: no, the wild card in place by some registers are not fraud. It is an unusual way but still permissible to use extensions under their management.

So I'll take you to an overview of fraud of any kind on the secondary market. Simply put, divide the world into two hemispheres: north, purchase and sale, to the south parking. Each of them is affected to varying degrees by serious fraud. And unlike storms, fraud is not seasonal! In this first note of a two-part series, we travel in the cold lands of fraud in sale.

In this sector, especially with the advent of the auction that has seen the development fraud. However, it does not date from yesterday. At the time any platform cheered the landscape of secondary market, it had to do without intermediaries. The more cautious spent a contract if transaction, other processes "old". Except that when you go to get your baked bread, you pay little attention to who is the first step: the baker who hands you your wand before you have paid or who you give your money before sesame in your hand. It is different when there is a generic domain name for quality, a few thousand dollars at stake ... and thousands of miles of network cable between the two parties.

The beginnings of the second market, the most common fraud was simply to "double" the other party. Clearly, for either the seller does not transfer the domain name once the money received from the buyer. Let the buyer not to pay the agreed price once the domain name registrar repatriated to her. And even with a contract in place, run always to go to enforce it within the jurisdiction of the selected country ... if indeed he had been chosen one.

And then the intermediaries have emerged. Generalists, as Escrow.com. Then specialists like Sedo or Afternic. Excellent news for the market, more risk of fraud! Do you not only do these providers have not eliminated the risk that the basis of them not inherent, but their appearance a little more complex thing and opened cracks. For it has suddenly become possible to rip through. The most common fraud remains to date the non-payment.

Example: you are on a dedicated platform for a buyer for the domain. You negotiated through the online delivery system through and you are agreed on a price. The negotiations have therefore led to a deal, supposed to be supervised by the intermediary. First step, automatic generation of contracts of sale for both parties, contract governing the relationship between buyer and seller V. Each remaining bound to the platform via its General Conditions. Second step, generation by means of a payment order for the buyer, meaning toward the funds to an account through secure. Third step, the payment therefore. And then, radio silence ... nothing ... dumb buyer and unreachable, contact dummy, or open for not paying. The seller as the platform are cheated. And since the platform does not force trial, it can seize the funds buy-side. Often, the seller blames her because unlike the buyer has the advantage of not having disappeared in the wild. The seller will end rarely go further in arguing before courts concerning the contract which bound him to the buyer. Sometimes he turns against the platform, and that this in turn has no choice but to turn against the buyer.

Note that the reverse is also fraud, a seller who refuses to transfer the domain name despite the payment by the buyer of the agreed sum to the account via the platform. Tripartite relationship, even topo.

But as I said at the beginning of this note, these are indeed the auction seem to have sounded the time of the frauds of all kinds and thus undermined the transparency of a market that did not need that to attract the attention of critics. Several techniques are used, certain universal character and others more focused on the modus operandi used by the intermediary.

At Sedo, for example, there are two types of auctions: the auction "system" and the auction premium. Model unique, the auction system can use the classic mechanism of supply-cons offer as a kind of launching pad for auction. In this case, you as seller can start bidding on a field for which you received via the system of online trading offers a classic you're ready to use the amount as the reserve price. The auction start price so concerned that you agree to accept as the selling price if nobody had ever offer more than basic interest during the auction.

Consequence "logic" is seen developing a type of fraud is to be yourself or to make an informed bid on the domain name in order to start the auction. That remains is to hope that someone will come and bid and raise the price. But the basic package, it is fraudulent in that it gives rise to the auction which would probably not have happened otherwise. Above all it is worth pointing out that this is not the best areas that are subject to this type of fraud. First injured in this case the platform. Why? For in so far nobody has bid, we arrive at the final transaction for which the buyer does not manifest course since he and the seller are in cahoots or worse, are the same person. Administrative costs for the intermediary, but also costs in terms of image.

On the auction premium domain names are selected on qualitative criteria by brokers. Fraud at the source is de facto impossible. But not inevitable once the machine started. Two types of deception here that - voluntary - as mentioned above, consisting to bid himself or to bid close to its domain name to artificially raise the price and aimed mainly to make him wait for his level says Reserve . And that - albeit involuntary - to see the small malignant stack the deck by submitting bids "for fun". So sometimes win the auction ... and then disappear into the wild, fueling the notion of a vicious circle.

The platforms were then placed in the guard rails to protect themselves from the devastating consequences of fraud and clean up the market in general, because they are the flag bearers. Control systems of all kinds have therefore emerged and continue to flourish to adapt to new techniques of fraudsters or fight effectively against manipulation-known. At this level, it is inevitable to associate human resources tools, automated monitoring (audits of customer data, IP tracing).

But it becomes especially more and more necessary to establish certification processes a priori, to ensure a priori the serious bidders. The principle being that of graduation: over the stakes are high, more controls are heavy and draconian. For events with significant media as the auctioning of domain names premium for example, tends more towards a selective fashion in which those who show an interest should show their credentials at the entrance.

Thus, we should move towards more and more modes of operation of traditional auction houses. The market for domain names is a young market that needs guard rails. The next "easy access" domain name does not simplify the situation. When a painting by Picasso is auctioned, there is little chance of parasites in the room because there has been a process skimming entry. All domain names are not Picasso, but it remains vital to fight for the survival of a market that has everything to gain by being healthy. In this context, empowerment of all its stakeholders and zero tolerance are prerequisites.

When y'en more, still y'en:

• World Record: sexe.org sold over 150 000 USD
• Belgian Evening
• Chinese.com sold 1.1 million dollars at Sedo
• Sedo's Premium Auction of May is over!
• The value of domain names - commercial potential