Twitter user and Chinese domain investor posted that Godaddy Auctions allows people to use two bidder accounts on the same name and a lot of people are using it for tricking the auctions.
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Can you point to an example of when it would be "ethical" for a group of bidders to conspire and place auction bids that they have no intention of honoring, in a scheme to suppress the actual sales price well below market value?Shills can't be avoided fully, and it may not always be unethical either.
They want to reserve the domain for themselves if the max real bid is far below their expectation, then what: they would add a high proxy bid; but real bidders would suspect that this is the case by looking at his bidding history, and quit bidding.
A 2 letter .net for $1k.Some more interesting rollbacks:
1158․com from $113,000 to $30,500
MV․net from $37,555 to $1,025
TopWash․com from $7,000 to $415
ConnectApp․com from $5,700 to $370
Maybe its summer time, on vacation?Still no official comments by GD ?
BQ․net from $37,500 to $1,630
7124․com from $14,000 to $5,100
There are at least four ways to deal with the situation where the winner doesn't pay:
1. offer the domain to the 2nd bidder for the closing price
2. offer the domain to the 2nd bidder for their best price (i.e. top losing bid)
3. offer the domain to the 2nd bidder for the price it would reach if the top bidder didn't bid (as I understand, this it what godaddy chose)
4. close the auction without selling the domain
Now we have to questions:
A. which method gives godaddy the most money
B. which method is the best for bidders
I believe the answer to #A is #3, and the answer to #B is #2.
The reason is that in scenario #2 there would be no incentive of shill bidding and in the odd case where the top buyer doesn't pay, the 2nd bidder might be happy to take the domain for their max offer - BUT also would not be obligated to, and then the transaction would fell through, with GD ultimately getting nothing. So all things considered they prefer getting $1k for a $5k domain that was bid up to $100k than risk getting nothing.
#1 is ok but lessens the chance of the 2nd bidder jumping on the opportunity; #2 is not great because the 2nd bidder might be disappointed to have been bidding against a frivolous party, but ultimately it's the price they offered and they will have a second chance to consider it and take or leave it (the obvious threat is shill bidding by the seller / auction house, but for the sake of the argument let's say GD wouldn't do this); #3 is nice in theory but will always end up getting exploited so in the end it only benefits the cheaters; #4 would just be a loss for everyone.
Don't know but for sure it damages the whole domain market considering how many expiring domains pass through GD auctions.Can this be considered fraudulent in the eyes of the law, by the way?
Can this be considered fraudulent in the eyes of the law, by the way?
Yes, not paying for the auction is a fraud and also there are also laws in many countries against any action that results in money loss of another party or unjustified gains for the perpetrator. But these things would need to be reported and usually it's good to know who committed them in the first place. IANAL but I think you can't report them just because you were the third bidder and you feel deprived of the chance to buy the domain for a good price - it has to be someone who actually lost money, i.e. GoDaddy and perhaps the registrar of the domain (if it was a domain expired from a GD's partner registrar). In the case of "Dynadot will charge bidder #2's credit card if the first bidder backs out." I think the 2nd bidder could also report it but they might have a hard time collecting evidence to back the accusation...
It would be pretty easy to go back and look at all the LL, LLL, LLLL, CC, CCC, NNNN, etc. that were rolled back.Yeah, I was talking about godaddy. If they do back and find someone who participated in many fraudulent auctions, resulting in godaddy's loss of money, do they have a case?
Of course, I expect the smart ones use a fake identity and stealth paypal accounts (or whatever). That is not to say it's impossible to track them down.
It is basically the best names, and specifically certain formats.