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What Is Domain Name Warehousing?

from: Internet Exposed Files

Now there’s a phrase you may not be familiar with; whoever heard of warehousing domain names? Well, in recent years, it has become an issue, and as a business owner it is something you need to be aware of. Put simply, it is the practice of companies scooping up domain names as they become available, and then keeping them (essentially warehousing them) until they can sell them for the optimum price.

Here is how they do it. Typically, in a strictly legal manner, a domain name will become available if its current owner fails to renew it within the required timeframe. This varies, but it is normally 45 days after the expiration date. So, a firm will then re-register the name, and promptly warehouse it. Over time, if the original owner wants the name back, he/she then has to pay whatever price the warehousing company asks. Now, you might ask as to why someone would let their chosen domain name registration lapse, and that is a valid question. Considering our touch economic times, it could be something as simple as the owner not having the money. And, by the time they have it, the time limit is up, and the other company has snagged the name.

Back in 2003, a report was filed under the Internet Corporation for Assigned Names and Numbers (ICANN). The report outlined three types of warehousing that were found to be in practice. The first pretty much follows the method outlined above; although the report did note one difference. It was found that something that registrar – the company that sold the domain name in the first place – takes over the name itself, and then tucks it away for future sale at a higher price. In the second case, this is where fraud comes into play. If the company that has the domain name is found to have obtained it through fraudulent means, the registrar may take the name back and either turn around and try to resell it, or warehouse it. In either situation, it is doing this as a means of recouping its losses. Strictly speaking, the domain name should go back to the original – valid – owner, but that is not always possible. Something the original owner will have already set up a new domain name, and thus does not want the old one, or they have gone out of business, and then they do not need it. Either way, the registrar is free to take the name back and hold it for resale. And finally, the third way is where the registrar just goes ahead and buys the domain name itself. That does sound like an odd practice – buying something from yourself, but it is perfectly legal. The reason registrars do it is because – legally – they are limited in what they can charge someone for a domain name. If they buy the name – even from themselves – they then have the option to charge more for it in a resale situation.

So, to prevent your domain name from being warehoused, you need to do two things. First, stay current on the registration payments, and second, watch out for hijacking. If someone steals your domain name, contact the registrar as soon as possible to get it back.




 

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