11
Mar
Is it Time to Pull the Plug on Underage Domainers?
This week has seen one of the internet’s largest domain thefts take place, involving a loss of $120,000 for the buyer of the stolen property. One of the interesting aspects of the case has been the suggestion that several of the fraudsters are under 16. This has increased calls for underage domainers to be stopped from participating in the industry.
The anonymous nature of the internet has always made it difficult to work out the age of people you are dealing with. While bad grammar can give clues, a literate teenager with a half-decent cover story can easily pass themselves off as an adult. The temptation is strong, as the world of domaining is a lucrative playground for the entrepreneurial youngster. One such underage domainer reports that he has had over $25’000 in successful transactions.
The question is though how many underage domainers are there? There have been some high profile characters such as Jordan Schwartz, who made a name for himself flipping several high end domains at the tender age of 17 but these posts suggest there are far more outside the spotlight. This is hardly surprising, the internet is a young person’s environment, with most teenagers possessing skills and understanding far beyond their parents. As Adam Strong writes, “The youth, the Domainer 2.0, that’s the future of domains.”
The industry seems to have turned a blind eye to the issue so far, citing admiration for the entrepreneurial spirit of these youngsters. However more cynical observers might suggest that the real reason is the low valuation of these teenagers’ labor and assets, which proves attractive to the older domainers. As many underage domainers do not have access to PayPal or banking facilities they are forced to make more complicated arrangements, involving domain gift tokens and Ebay purchases. Understanding their disadvantage, they often cut deals that favour the buyer as they attempt to cash out their work.
The dramatic increases in domain values has raised important questions about this practice. Far from some extra pocket money, some underage domainers are now negotiating deals worth $X,XXXs. In the eyes of the law though, they have not passed the age of majority, so can not legally enter into any binding contracts. That means there can be little legal recourse for the buyer or seller when a domain deal goes bad. Further to this, the fact these minors can not enter into a contract prohibits them from even owning a domain name, let alone trading in them.
You represent and warrant that You are 18 years of age or older, or that You have an agent authorized by law to represent You who is 18 years of age or older who is entering into this Agreement on Your behalf.
Moniker and Tucows both have clauses requesting that the registrant should be of “legal age to enter into this Agreement”. By definition that would exclude anyone under 18, or the appropriate age of majority in the country/state where they reside.
This risk is not just one way though. As the young domainer is a minor in the eyes of the law, liability for their failed domain deals could fall to their parents or guardians, who had little idea of the business their son or daughter was engaged in. They also face a more frightening prospect from the domain registrars, as they are entitled to seize or delete their entire portfolio for breech of contract. This fact alone may explain why so many wish to remain under the radar.
While exclusive communities such as TRAFFIC have avoided this problem through selective membership, public domaining forums have naturally attracted their fair share of teenage users. This recent scandal has made DNForums examine their policy towards underage domainers and they are holding a poll on the topic. Although they ask for a payment from the user before they can buy or sell domains, they do not currently have any age checks built into the process.
As the domaining industry attempts to legitimize itself, it seems unlikely they can accommodate a group that exists outside the law. However, the temptation is to leave this issue running and fail to self-regulate, perpetuating the idea of the “wild west” of domaining. I hope that there is some substantial guidelines released over the next few months to show what role, if any, underage domainers can play in the industry.
March 11th, 2008 at 11:01 pm
I’m really torn on this issue, and I notice you didn’t give a definitive opinion either.
First of all, I think that it’s important to separate out the current fraud issue. While minors seem to have been involved in that, the fraud could just have easily been perptrated by adults.
I really do admire these young people for getting into domaining so young. At that age, I was more concerned about chasing girls, listening to music, going to movies, dressing fashionably, etc. If I had been a bit more entrepreneurial back then, it would have made a big difference in my life.
Also, a lot really has to do with maturity, rather than age. There are mature teenagers and immature adults.
On the other hand, there are a lot of dangers with minors getting involved, as you point out.
A tough one, for sure!
March 12th, 2008 at 1:01 am
Yes Jeff, it’s not an easy one. I started online very early myself, with my Amstrad 1512 at the age of 11. If domaining had been more available then, I’m sure it would have done the same as these guys.
However, the amount of money involved now is a key issue. As I wrote in the article, this isn’t about topping up the pocket money. There are recorded deals in the $X,XXXs range. That’s some serious money.
The domain industry wants to put it’s house into order and to get rid of this “wild west” image. That means contracts, rules and legalising the industry. Inevitably that will also apply to domainers who are under 18.
Ideally they could carry on domaining but with the support of an adult, maybe they could bring a parent, guardian, relative or trusted family friend into their business.
There are quite a few aspects that an older business mentor could help with. I think it’s fairly safe to assume these guys are not paying tax or employee payments on this income source. They won’t have incorporated their company or set up the required legal structure for doing business. Partnering with someone who could bring this experience could be very useful for them. It would also give them more credibility, a source of business advice, open doors in regard to PayPal or banking and take their hobby into a fully fledged business empire. It’s not that unusual either in the technical sphere, even Larry and Sergy needed to bring in several business mentors while they were building up Google!
If I was an underage domainer now, I would approach one of these people. You might be quite surprised at the response.
March 13th, 2008 at 12:48 pm
I’m amazed people are even debating this issue, it’s clearly a non-starter.
First, as Jeff points out, age isn’t the issue fraud is. Fraud is illegal no matter who engages in it.
Second, as the article states, you already must be 18 to be the LEGAL REGISTRANT. What end would this serve? “Hey Mom, buy this domain. OK honey.”
Lastly, who cares how old the seller is? If an 11 year old has a name I want and am willing to pay for, more power to him. Smart kid!
I myself registered my first domain at 17. To this day it is still my most valuable domain (I’m now 30). I get offers almost every month that would literally change my life. Too bad it’s the only one I would never consider selling. It’s my last name, armer.com.
So what? I shouldn’t have been able to register it?
March 13th, 2008 at 3:18 pm
@Jeremy
Thanks for commenting.
As I wrote above, I started online very young myself (similar to you I managed to get my surname, so I think we’re coming from the same place here).
The point is though, if the domaining industry wants to be recognised as legitimate, it needs to have rules and legal contracts in place. At the Registry/Registrar level and at the domainer level.
The bottom line is you can’t have a contract with someone under 18.
Lets take the senario you mentioned in your comment. Say you buy a $20′000k domain name off an 11yr old kid for $1000. His parents find out a few months later and take you to court, saying the child was unable to enter into a contract to sell. They say they legally supported the child in buying the name. In the meantime, you’ve already spent $15′000 developing the site and building more traffic to it. INAL but it all sounds very messy to me.
As domains spiral up in value these sorts of situations are going to arise. There’s just too much money at stake to be outside the legal framework in my opinion.
July 30th, 2008 at 9:10 pm
Hello my name is Mike. I am 14 years old and I started programming a the age of 10. I figured out I was extremely good with computers fast. I made my own Paypal account which I still use to date. I have made over $322.000 U.S. Dollers on the internet. I have also purchased domain names that are worth extreme amounts of money. I believe people should be able to start working and do “of age” things when they feel like they are ready. Or perhaps take tests to see if your mentally fit for the real world. I have many accounts on all kinds of add and survey sites with 1000’s of referrals and I have also sold game’s I have made with my programming skills. Everything I have done by far was done in a way where I could not lose any money. Do not try to contact me or I will freeze your MSN access.
-mike