Every now and then people bring up some of the problems with GoDaddy auctions. One where two bidders bid up a name hoping to drive everyone else out and then the top bidder does not pay and the second bidder gets the name. One problem with that is that GoDaddy does not always give the name to the second bidder.
I have written many times where GoDaddy loss was DropCatch gain.
The latest thread started by @Furquan
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.
Michael Sumner from Namebio gave his thoughts in the thread.
This topic is something I keep a closer eye on than most people. Let me start off by saying that I believe the only correct and fair way to do it, with the least possibility of gaming the system, is to re-auction the domain when the winning bidder doesn’t pay. There is no legitimate reason this shouldn’t be possible to do if they really wanted to.
Rolling back all the winner’s bids is the next most fair, but it basically encourages abuse. You can run the bids up from practically nothing to an amount nobody else will participate in the span of a few minutes using two accounts, and you get the domain for a steal. I believe GoDaddy manually watches out for this and tries to remedy it before the auctions close, but they’re clearly not perfect at it or the perpetrators would have given up by now. It has been an issue for a very long time.
I think the “fingerprint” should be fairly easy to identify, as the fake bidding war has to happen fast to ensure nobody else jumps in and sets a new floor for the rollback. Generally over a few minutes. And it also has to happen early in the auction before legitimate bidders join in. A typical auction would have most of the activity towards the end not the beginning, so it should be reasonably obvious to spot. But still, no matter how hard you try and how diligently you police it, people will find a way to game this.
Let’s dig in to some actual data though. I took a 10 day window from June 8th through June 17th, during which time there were 18,486 expired auctions that ended with bids. Of those, 65 were rolled back any amount (0.35%), for a total dollar volume of rollbacks of $163,207. The average rollback amount was $2,510.88 and the median was $343.
But many of those were not rolled back because of the system being gamed, they were obviously just non-paying bidders. For example, nobody is going to create a fake account and waste time bidding to steal 09305․com for $35 instead of $80 (one of the actual rollbacks).
This is where it gets a little subjective, but I defined “gaming the system” as a rollback of > 40% of the original close price, AND a rollback dollar volume of at least $1k. These weren’t chosen arbitrarily, I manually looked at the ones that were now excluded and none were questionable. Based on that, I would say 20 of the auctions were potentially gamed with this strategy (0.1%) during those 10 days, although some of them could have still been a standard non-paying bidder scenario.
Some of most egregious examples were:
5047․com from $6,205 to $1,225.
Spend․org from $15,251 to $6,456.
SsangYong․com from $46,000 to $135.
501․cc from $32,500 to $10,099.
CasinoChain․com from $9,014 to $1,136.
ProRadio․com from $6,640 to $665.
BellsNWhistles․com from $4,257 to $127.
Anecdotally, it seems to happen most often on numeric and SEO names at this point. Also keep in mind it’s happening on around 1 in 1,000 auctions with bids, not 1 in 1,000 of total auctions. I’m not sure how many expired auctions there were in total during this period, but the percentage of total auctions gamed would be drastically lower. I’m guessing GoDaddy won’t change much of anything with such a low percentage making it past what they’re currently doing.
Anyway, hopefully this helps shed some light on the scope of the problem.
He also detailed some rollbacks, one where the initial closing auction price was rolled back after the winning bidder did not pay.
Here are some other liquid/short name rollbacks going back another 35 days from the initial window:
26x․com from $4,444 to $550
oAir․com from $9,088 to $15
6v․net from $8,100 to $15
8y․net from $7,500 to $520
6y․net from $7,200 to $15
NDTC․com from $3,800 to $45
GBQP․com from $4,750 to $60
2006․com from $91,000 to $20,250
2875․com from $31,399 to $8,100
994488․com from $4,850 to $128
TD7․com from $4,000 to $15
ZS8․com from $6,600 to $1,100
588888․com from $34,500 to $45
TWCI․com from $3,250 to $265
883․cc from $55,500 to $15,050
OHTY․com from $3,000 to $62
F6․net from $9,088 to $32
That’s wild $9,088 to $32. $34,500 to $45 is even crazier.