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One thing Dynadot is guilty of here is fumbling their response to this matter, which is unfortunate because my impression (based on my dealings with them over the years) is they are good and ethical people. At least they did respond, eventually, but I would not give them top marks for how they responded, hampered no doubt by the fact many of their key people were tied up at NamesCon while this whole thing blew up on X. Timing sucked for them. It will be interesting to see how this plays out over the coming weeks and months.
rlm
Bonfire.ca
Based on the slightly tardy response by Dynadot, I believe it was 100% fair (assuming that it was presented the same way in the first contact to Rick after the auction). The next highest bidder can either accept the domain at their highest bid, or, take the risk of restarting the auction at the last valid bid price.
Personally, if I were the auction house, I would re-frame it like this:
"As per auction policy, the auction will be restarted at the last legitimate bid price and will resume as per normal auction rules. Alternatively, as a valued customer we are giving you the option to avoid restarting the auction and accepting the domain at your final bid price of ($xxxxxx). If we don't get your response within 48 hours, the resumed auction will be scheduled and you will be notified."
This is the side of Rick I don't like. He's absolutely right that its messed up that this happens. And I bet it happens at most auction houses. And presuming he wasn't given the option to restart the auction, that's also fucked up.
HOWEVER, if he was given the option to restart the auction, that really is the only fair thing to do and Rick is blowing this out of proportion - wow shocker. Anyone with rational thinking would understand that restarting the auction is truly the fairest option - and that he probably shouldn't even be given the option to purchase it at any price post auction. That would avoid any accusations of unfairness.
Not all auctions have the ability to delay 48 hours for the second highest bidder to decide if they want it and continuing at the price before the invalid bidder for the new auction is not right either because some bidders may have rethought it and decide to pull out after the delays.
Fraud of any kind should cancel all bids and start over from scratch, it means the process was flawed and the only fair thing is to hit refresh like when a computer reboots.
Big warning... we have detected fraudulent bids this auction is terminated and will restart at 1:02 pm ESD.
That is the fairest to all parties involved
PS. To prevent auction houses from simply canceling due to low bids (because you know that will happen) the new auction should be mandated within the hour of cancelling the origional.
Again, that is all my opinion but it would be hard to argue the fairness of that system and anyone bidding would be bound by an agreement that mandated them to verify bids and intend (upon request) within the hour of participating in an auction.
Fraud of any kind should cancel all bids and start over from scratch, it means the process was flawed and the only fair thing is to hit refresh like when a computer reboots.
Big warning... we have detected fraudulent bids this auction is terminated and will restart at 1:02 pm ESD.
That is the fairest to all parties involved
PS. To prevent auction houses from simply canceling due to low bids (because you know that will happen) the new auction should be mandated within the hour of cancelling the origional.
Again, that is all my opinion but it would be hard to argue the fairness of that system and anyone bidding would be bound by an agreement that mandated them to verify bids and intend (upon request) within the hour of participating in an auction.
Drop Catch does this.
They also need to make the bidder ids public. Labelling bidders as Bidder 1, bidder 2 doesn't help with transparency. They could also add a badge just like how NameCheap does it
Looks like Rick is not buying any of the explanations and is moving forward with legal action against Dynadot
rlm
Bonfire.ca
Personally I think this has become more of a witch hunt now than anything, looking to set an example of one registrar when they all deal with the same exact problems in regards to auctions and manipulation. Some of which we all assume is self-induced by their own shill bidders. It would be foolish to think that wasn't happening anywhere. But if they offered him the chance to either accept the next bid (even if it was propped up by fake bids), or to re-run the auction, then I don't see the problem. That choice was apparently given to Rick, which seems pretty fair to me. Re-running the auction actually seems the fairest option because certainly their might have been other bidders who never got involved because fake bids were already above their limit. Re-running it is the only true way to capture those bidders too. And yes, that also means that after all the publicity, the auction could even attract new bidders. That's the choice Rick got to make though. Obviously no scenario is perfect after a bidder backs out. But I do agree that registrars need to minimize this from occurring with more auction transparency, and stricter penalties for defaulting. I would suggest that the forfeited deposit from the fraudulent bidder get paid directly to the next highest bidder, because that's the person who was harmed.
I really can't see how Rick will win any sort of legal judgment. What was the actual harm? Lost opportunity? It is extremely hard to prove and win based on lost opportunity. Rick proclaims his incredibly low sell-through-rate and lack of liquidity in his investments. That would make showing actual monetary harm even more difficult. The best he could hope for is to value the domain at a liqiud price, which will be less than his legal bills.
And for what it's worth, even CIRA representatives unofficially told me years ago that there was nothing that they could or would do about shill bidding. They weren't even convinced it was actually illegal. They said ultimately no one is twisting your arm to make the bids you've made. They said they only thing that CIRA would consider as a violation of their policy is if the auction house itself won the domain name. But as we know its too easy to have shill bidder friend or family member, so its effectively an unenforceable policy. CIRA also said they don't even have the rights to audit a registrar's customer records, so it seems there's literally nothing they can do.
I really can't see how Rick will win any sort of legal judgment. What was the actual harm? Lost opportunity? It is extremely hard to prove and win based on lost opportunity. Rick proclaims his incredibly low sell-through-rate and lack of liquidity in his investments. That would make showing actual monetary harm even more difficult. The best he could hope for is to value the domain at a liqiud price, which will be less than his legal bills.
And for what it's worth, even CIRA representatives unofficially told me years ago that there was nothing that they could or would do about shill bidding. They weren't even convinced it was actually illegal. They said ultimately no one is twisting your arm to make the bids you've made. They said they only thing that CIRA would consider as a violation of their policy is if the auction house itself won the domain name. But as we know its too easy to have shill bidder friend or family member, so its effectively an unenforceable policy. CIRA also said they don't even have the rights to audit a registrar's customer records, so it seems there's literally nothing they can do.
NameCheap faced a similar issue and did not update their policy right away. It took them more than a year, during which they handled the problem by cancelling the auction and rerunning it. GoDaddy also took years to address the same issue, eventually implementing verification improvements. Sav encountered it as well and responded by pre-authorizing card on account to prevent fraudulent bids.
rlm
Bonfire.ca
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