UK - Bought a domain through a web hosting provider - now they say I can't have it

Question

I purchased a domain name via a web hosting provider. It was priced on their website as £7.99. I've paid for it and received a confirmation email and an invoice (stipulating the name of the domain, the period of 1 year, and 'paid') In my account I noticed that its status is 'pending' so I opened a support ticket. What I received was:

Thank you for your order with us. Unfortunately, we can not register this domain for you at the price listed on our site due to the fact that domain registry considers 'example.club' as premium domain and the price becomes much higher. This domain will cost $ 4560.47 each for 1 year. These rules are established by domain registry, so neither we not our partner registrar NameCheap can affect this, unfortunately. Please choose another name for your domain with extensions .club and we will be glad to assist you with domain registration.

Do they have the right to do it? I mean, they already sold it to me. My point is if they don't know the real cost of a domain, they shouldn't be offering such a service to customers, should they? Obviously I see it as extremely poor practice but are they breaching any law/consumer rights?

When I pointed out that they've already sold it to me (got an invoice and confirmation email), they said that as per one of the point of their T&C they reserve the rights to pass any additional charges on to customers. The point of T&C in question is as follows:

15. Billing. If You signed up for a monthly payment plan, Your monthly billing date will be determined based on the day of the month You purchase the products or services. If that date falls after the 28th of the month, then Your billing date will be the 28th of each month. If You signed up for an annual (or longer) payment plan, and You elected the automatic renewal option, Name_of_company will automatically renew Your services when they come up for renewal and will take payment in accordance with the designated payment method at Name_of_company’s then current rates.

If for any reason Name_of_company is unable to charge Your account for the full amount owed Name_of_company for the products and/or services provided, or if Name_of_company is charged a penalty for any fee it previously charged to You, You agree that Name_of_company may pursue all available remedies in order to obtain payment. If You pay by credit card and if for any reason Name_of_company is unable to charge Your credit card with the full amount of the services provided, or if Name_of_company is charged back for any fee it previously charged to the credit card You provided, You agree that Name_of_company may pursue all available remedies in order to obtain payment. You agree that among the remedies Name_of_company may pursue in order to effect payment, shall include but will not be limited to, immediate cancellation without notice to You of any domain names or products and/or services registered or renewed on Your behalf. Name_of_company reserves the right to charge a reasonable administrative fee for administrative tasks outside the scope of its regular services, including additional costs that it may incur in providing the services and pass these costs along to You.

Are they within their rights to do it? What do you suggest I do it? Thank you

EDIT: Just to clarify: The company is happy to refund my £7.99 and cancel the purchase. They just say: it turns out you cannot have this domain for £7.99, you'd have to pay a few thousands pounds. I don't think there's any intent to scam customers. I think it's more of case of faulty system/incompetence. My take on it is they've already sold it to me, haven't they? Is it not binding at the price on the invoice? I'd rather they honoured the transaction that took place at the advertised price. They are happy to cancel everything and refund my money but why should I? I've already bought it? If they made a mistake or have a system on their website that does not provide the true price, it's not my problem.

Am I wrong in assuming the above?

Answer 1

This smells strongly of "bait and switch" fraud: offer a product at an attractive price, then "discover" that the product is not really available at that price. By that time the customer has sunk costs and is therefore willing to accept an alternative product with a lower quality or higher price than was originally promised.

Looking at the homepage for ".club" it seems that they do indeed offer different prices for different names. I see "examples.club" listed at $101 while "model.club" is listed at $19,000.

From your post it sounds like your hosting company have cancelled your purchase and will not actually charge you the higher fee. This is, as you say, a very dodgy practice. You might want to move to another company which is more up-front about unknown costs for such domains. If you have already paid the £7.99 then you are entitled to that money back. You do not have to accept a different name: that would be a classic bait-and-switch scam.

They are NOT entitled to charge you a higher price unless you agree to it.

If they won't return your money or try to charge you more then you should drop them like a hot brick and report them for fraud.

Edit in response to question edit

The situation is not clear-cut, and will probably depend on the exact wording in the company's terms and conditions to determine exactly when the contract was formed.

An article about a similar case in The Telegraph had this to say:

The legally binding contract is complete when a retailer accepts an order. However, acceptance does not necessarily happen at the point of order. Even the confirmation email may not be an acceptance. Some retailers reserve the right to cancel an order up to the point of delivery. It is therefore important to carefully check the retailer’s terms and conditions (which must be available on their website) and emails – if a retailer simply acknowledges an order, there may be no contract at that point.

Lots of companies have T&Cs saying that there isn't a contract until they actually deliver the item, so if they don't deliver then they are not in breach of contract.

The company may also be able to argue that its offered price was so grossly disproportionate that it was an obvious mistake and therefore they should not be held to it. UK contract law is based on the concept of a "meeting of minds" where two people have the same view of the contract and agree to it, but this is rather problematic when one of the minds was represented by a buggy computer. You might be able to counter this by showing that they are still doing it, and hence this is an ongoing business practice rather than an honest mistake.

Ultimately your only options, assuming they decline to honour the purchase, are to either accept the refund or take them to court requesting an order of specific performance.

Answer 2

Contract Law

When a vendor advertises a price they are not making an offer that is open for acceptance. Technically, they are making an ‘invitation to treat’ - “this is for sale and we will consider offers at this price point.”

When you placed your order, you were making an offer which was open to the vendor to accept or reject. The vendor rejected so there is no contract. All the vendor is required to do is refund any payment you made.

The law is unsettled as to if an offer can be accepted by an autonomous system or if an actual human being needs to do so. Where an autonomous system actually completes the contract, such as when a vending machine actually vends the product or an autonomous broker buys or sells shares, it creates a binding contract. In the circumstances you are in an automatic acceptance does not create a contract - as yet, watch this space as such systems become more sophisticated.

Consumer Law

If the vendor engaged in misleading and deceptive conduct, there may be a breach. I am not familiar with the UK law but typically such statutes do not require intent nor do they consider whether you were deceived or misled, the threshold is if a reasonable person would be.

Your remedy would be the damage you suffered which, if they refund your money, is nothing.

The government can take action to enforce the law which can include a fine but that is a matter for them, all you can do is report the conduct.