One reason I do not bid on domain names that are at auction very often is the simple fact that most domain name auction services (or any online bidding really) make it pretty simple to create an account and bid. Why some people feel it is a "game" and create an account and bid without ever really having the true intention of ever paying, I have no clue.
Consider this fictional story I wrote about a way to buck the system!
The fact, it happens and at almost every auction service. Prices get inflated to sales prices that never would have went so high. Many will say, but it takes TWO to make an auction go high. Yep, it sure does but who says those two bidders are not the same person just playing around. Sadly, there are times when a real person gets caught in the mix for a domain name they really want or need and end up paying with real money, a price they should not have had to pay if the bidders were all real.
Proof of the scam in action with a domain auction ending for $9,955 but later dropped to $355 after the auction ended!
That is the hard thing. How do you tell if the bidder is real or not?
Taking a look from a different angle… what are these auction services doing to protect the real bidders? I think little to really nothing with most services that they show publicly. I think Sedo is about the only one that shows "activity" levels but that only shows somebody a little bit and can make you question things even more if the bidder has "no activity".
Then you have services like GoDaddy.com, SnapNames.com, NameJet.com etc. Each are a little different but I think most would agree that they have little to no clue who they are bidding against and if they are a "real" bidder.
Today I was looking at expired domain name auctions at GoDaddy. All the auctions in the follow screen shot below, I think have BS bidders!
Why? It is not all that often an auction has Hundreds of bids. If the auction does have hundreds of bids, it is because of a low starting price and is a Great Domain! I think it is fair to say that most people would not even place a bid on any of these domain names, let alone 100+ bids and all have similar prices. To me, this smells shitty. Really, alammarq8.com… 137 bids and a price of $980? Come on now.. All 10 of these auctions are fishy to me but think of all the other ones that may not be so obvious.
With thousands and thousands of domain name auctions ending daily, it is very real that a good chunk of the bids being placed are by people who never have true intentions of paying. Sad but true!
Why is it that real bidders always seem to get the short end of the stick? It’s not like GoDaddy, SnapNames, NameJet, Pool, Sedo etc rewards real bidders with a 5% discount from time to time to say thank you or a rewards type system. Real bidders spend a lot of money with many online auction services with really no "thank you" for being a real, paying customer.
How to fix fake bidders?
I think for every domain name you bid, win and pay for, you should be rewarded a point. Every domain name at auction would show an amount of "verification points" to bid. The better or higher priced / valued the domain name, the more "points" you need to bid. If you do not have "points" to bid, you can pay a non-refundable down payment to bid. A bidders points would never go away unless you bid and do not pay for an auction and then penalty points would be taken away. So after you prove you are a "real" and trusted bidder/buyer… nothing really would be different then they are now, besides the fact that as a bidder, the likely hood that you are bidding against somebody that is real is more likely.
Domain name auction services are very well aware of what domain names are "good" and the ones that are not, so the points system would be pretty easy to put in place. If I do not buy a lot of domain names or am a new bidder, I do not mind putting down a non-refundable payment that is a credit to my account. If you are real and buy domains, you are going to use it up anyway! The "fake" bidders will not. Past bidding history can easily be used as well because the auction services know your history, so for many the only change you would see are your "Verification Points".
Would this system be perfect and stop it 100%? No but it would be better than most system put in place now and would also help put some bidder confidence in place that is lacking now. I have no clue if bidder Johnny1439 has ever paid for a domain name auction before right now or is simply around playing games. Heck, at GoDaddy one bidder even got banned for a non-paying bidder and was allowed to pay $20 to get back in the game! Then you have the little "story" I created about two fake bidders bidding like crazy on a high priced domain at an auction service that "gives" the domain to the second highest bidder when the high bidder doesn’t pay and the high bids are removed… it happens. (I couldn’t find the story but it is on DotWeekly some where).
Fake bidders are a big problem and costing people A LOT of money, many that do not even know it. They also cause a lot of extra work and stress on the auction systems, redoing auctions and even passing along domains to the "next bidder". It needs to be fixed and these auction services really need to be showing that they are taking steps to curb the problem because I do not see it.
Calvin
I agree. I think even Sedo has that. Many name sell and those name are bogus. I put my names on Sedo and nothing. Believe me, my names beat those others. It is a scam!!!
Cole
As someone who regularly buys 5+ domains per week at GoDaddy auctions, I completely agree with your post. On most auction sites, you can search by number of bidders to find quality names that had low reserves, but at GoDaddy, this does not seem to be the case at all.
The screenshot you posted above perfectly illustrates the point…how do all of those domains have such similar bidding patterns? Something smells fishy. On an auction site as large as GoDaddy I am almost certain shill bidding exists, but it is extremely tough to tell who these bidders are as GoDaddy masks usernames.
Great post, Jamie!
Product Domains
You obviously didn’t research any of those domains, most are PageRank 5 or 6. The prices are so similar because bid increments are $5 and buyers are cheap on GoDaddy. In the time it you to write this post you could have researched why there are so many bidders (not everyone buys domains based on keywords)instead of jumping to conclusions and making all these assumptions.
Jamie Zoch
@Product Domains,
Nice catch on the PR as I do not search by that. I still think fake bidders exist at GoDaddy and basically all auction services. Just because a domain has PR doesn’t always mean the bidding is real but as you stated, I may have jumped to conclusion on these specific domain names in the screen shot.
Nathan King
A membership to godaddy aucions costs $5/year (but is included free with almost any of their products). SnapNames and NameJet both require a valid credit card and check for available funds. These things help prevent fraud more than ebay does.
I have bought quite a few names on godaddy and I’ve found as a general rule of thumb that traffic stats are usually inflated at least 10 times.
Chris Kennedy
Jamie,
Appreciate your attention to detail in most all of your DOTWeekly pieces, like this recent post (http://www.dotweekly.com/go-momma-wins-100k-godaddy-com-commercial-contest) in which you pointed out the precise date of a whois change (and our CEO’s smile at the end of the Indy 500 race).
Today’s post compels me to offer comment about Go Daddy Auctions, however.
Here are four key facts about our domain name auction business:
1 – Go Daddy employs strict anti-fraud measures to maintain the integrity of its auction process
2 – A domain name’s perceived value can be tied to a number of factors, including Page Rank & traffic
3 – A handful of bidders battling over a domain name, placing sequential bids can quickly drive up the price & bid volume
4 – All Go Daddy employees are prohibited from bidding on or buying domain names through Go Daddy Auctions
Go Daddy operates one of the largest domain name aftermarkets in the world. We take pride in our auction process and services, as well as the fact we were honored as a finalist for the Better Business Bureau Business Ethics Award.
If you suspect fraudulent bidding, Go Daddy wants to know about it, please contact 480-366-3303.
Chris Kennedy
Director of Aftermarket Services
GoDaddy.com
Jamie Zoch
@Chris,
Thank you for your insight and providing facts into this. From a bidders aspect, I do not have a “safe” feeling while bidding in an auction due to the lack of transparency of who I am bidding against. I know it is very hard to prove a fake bidder both for me and sometimes even directly on GoDaddy but Non-paying bidders do happen. Godaddy offers the domain to the second high bidder at this point. What happens if the second high bidder had connections to the first high bidder and the second high bidder gets the domain name for near starting price. I see this as an act of stealing really. If somebody can do this and simply pay $20 to get back into another auction, just doesn’t seem right to me.
~
Simply seeing Bidder 1 or Bidder 12 etc during bidding doesn’t IMO help build buyer confidence, I think it could be improved to better help the community to have some trust they are bidding against real, paying customers. Maybe show how long they have been a customer. A scale on buyer activity etc. Since most GoDaddy Auctions that do end at auction are not reported, it again makes it hard to build in the trust if the domain really was paid for and sold for that amount, was the second highest bidder awarded the domain, the third etc.
Ulf Wolf
Great post.
Perhaps I can just add to this that the best way to guard against being ripped off by online sales or auctions of any kind, Craigslist and eBay included—and whether seller or buyer—is to use a *bona fide* online escrow company. Especially for pricier items like antiques, jewelry and autos. Although it does add some cost, it takes the uncertainty out of the transaction, and that’s a small price to pay for peace of mind.
For my money, the best bona fide online escrow (and there seems to be ten fraudulent escrow sites for every bona fide one) is probably Escrow.com (http://escrow.com). In fact, it’s the only one that eBay recommends, and is the only online escrow company that is licensed to provide escrow services all across the United States.
Take care,
Ulf Wolf
SL
@Product Domains: Whoa there, before you get on your high horse and spout off, you need to do some basic research too.
How could a PR6 site only have two (2) backlinks? And not show up at all in archive.org? And where’s the traffic for a PR6 site? Even with Alexa/Compete/Moz inaccuracies they’re all showing zero basically. Plus Godaddy would be catching the most accurate stats and it only shows single digits.
Scammers usually bump both the traffic and PR skyhigh before auction but may not have done both in this case. (Bumping PR is performed through detecting and redirecting the gbot to a high PR site)
Adding additional traffic might not have been necessary if shills are added to the mix.
Bottom line is no one knows the exact answer in this case, but my guess is it’s most likely a combination of Jamie’s hypothesis and newbs buying blindly off the high (obviously fake) PR. Fwiw.
SL
Correction: “Plus Godaddy would be catching the most accurate stats and it only shows single digits for alammarq8.com with PR6.”
JB
Fake bidders and Fake page rank.
1 – Go Daddy employs strict anti-fraud measures to maintain the integrity of its auction process.
Good job Chris Kennedy
Dillinger
http://www.alammarq8.com is still for sale and you can now ‘buy it now price’ of $500 at DP forums.
Why would he be selling so low if the above info is correct.
It does sound strange I agree.
Dillinger
Jamie Zoch
@Dillinger,
That is pretty interesting considering with time left in the auction, the domain already had a $980 bid. I don’t know many people that would sell for a $380 loss right away. Checking whois, the domain has not changed ownership, so a couple things may be happening.. the past owner paid the $80+ to renew the domain and is selling it or somebody that doesn’t own it is trying to sell the domain.
Dennis
I just recently participated in a backorder auction for an expiring domain on snapnames.com. The domain was a .com and I already owned all of the other major suffixes. The opening bid was $69 and when ask for a maximum bid I chose to put in $247 as I could change it later if I wanted to. So when the auction opened, there were 5 other bidders besides me, all with the minimum bid. With the auto bid feature I instantly became high bidder at $74, since the minimum increment was $5. I stayed high bidder with no activity from anyone for several days. In the final minute, mind you not minutes, but minute, another bidder raised it $5 and automatically my bid went in for $5 more. Nothing too unusual about that except, the other bidder only raised when exactly 1 minute remained. This went on for several rounds since snapnames extends the bid window by 5 minutes for each bid made in the final 15 minutes. The wait was excruciating and the price quickly reached $200. At this point I upped my maximum bid to $347, just in case. When the auction finally ended, the price had been driven up to $244 – exactly one bid below my original maximum. What’s strange is every counter bid was done with one minute left even though my counter was applied immediately. If it was truely another “human” bidder, there would have been variances in the pattern even if their max bid was their current bid. Highly suspicious to me. I feel like they drove the bidding up to my original max since they had the number already. I can’t prove it, but I would be curious if others have had this phantom automated competitor. I won, but I still have a sour taste in my mouth.
biddingaluck
bidding is not a fun thing. expecially in different time zone, thats hard to won but waste your time.
wertaces
That is true. All offers are fake…