Expired auctions at GoDaddy attract hundreds of active bids daily. The system generates plenty of revenue for GoDaddy and it’s part of the “core services” that GoDaddy reports in its financial reports quarterly, an important gauge of profitability.
The system is not foolproof, as far as bidding legitimacy is concerned, and it has been the focus of investigation by domain investors due to the ease that it’s being abused.
A thread at NamePros exposes the techniques that primarily Chinese bidders are using to leverage the GoDaddy auctions’ failure to effectively validate the identity of bidders or their relationship during bidding.
How does the abuse take place?
According to contributors such as DataCube and others, the methodology is simple: A rogue bidder uses two aliases or an accomplish that bid up an auction. Early on, the auction reaches astronomical levels for the domain using alias1, all while alias2 remains within reasonable bidding levels. As other parties aren’t bidding above alias1, the ensuing end of the auction takes place with winner alias1 never paying for it. The domain is then awarded to alias2 for considerably less and without interference from other bidders.
NameBio has been rolling back the publicly announced sales prices of domains, where this pattern is evident:
Several years ago, the SnapNames founder was involved in a bid shilling scheme that used a similar technique to drive up bids and increase profit for his company; in this case, the scheme is used to keep the actual payment low.
Join this discussion thread on NamePros to share your experience with bidding on the GoDaddy Expired Domain Auctions.
