Snapnames.com bidding by employee

by ian on November 5, 2009

Received this email today

Recently, SnapNames discovered that an employee had set up an account on the SnapNames system under a false name and, under this name, bid in SnapNames auctions. This is a clear violation of our internal policy and was not approved by the company. We deeply regret that this conduct has impacted our customers.

Extent of impact

This conduct affected a small percentage of SnapNames auctions:
Bidding affected approximately five percent of total SnapNames auctions since 2005, most of which occurred between 2005 and 2007.
The incremental revenue from the bidding represented approximately one percent of SnapNames’ auction revenue since 2005.
No matter the level of impact, SnapNames takes this matter extremely seriously. When the matter was discovered, the company immediately closed the account in question and began a thorough investigation. The employee has also been dismissed from the company.

SnapNames further discovered that, on certain recent and limited occasions, when the employee won an auction, the employee secretly arranged to refund from SnapNames to the fictitious account a portion of the winning bid amount.

Remedy to affected customers

Though on some occasions the employee won the auction, in many instances the bidding caused the ultimate auction winner to pay more for a name than had the employee not participated in the auction.

SnapNames neither condones this conduct nor wants to be perceived as benefiting from the conduct. Accordingly, we have decided that regardless of the circumstance, in every auction where the employee’s fictitious account submitted a bid which resulted in a higher price being paid by the winning bidder, SnapNames will offer a rebate, with 5.22% interest (the highest applicable federal rate during the affected time period), to affected customers for the difference between the prices they actually paid and the prices they would have paid, had the employee not bid in the auctions. The rebate will be available in cash or in credit on the SnapNames platform, at your discretion.

SnapNames has moved quickly to address this situation. The company has retained Rust Consulting, an independent third party, who will administer the rebate offer. Within the next week, Rust Consulting will contact affected customers to provide details regarding the offer.

Seriously, it is surprising that this could go undetected from 2005 to 2009, but I have to give them kudos for admitting the problem and trying to make good on the problem. Hopefully I qualify for a refund :P
Looks like email should go out in around a week. Although some people already know how much of a refund they are entitled to.
Snapnames.com used to be the pioneer in the expired domain industry. If you were the first person to get a backorder in, you used to be able to get it for US$69 which is very cheap. Then I think pool.com came along and started auctioning domains that expired and were successful in obtaining. They had very good registry connections and won a lot of great domains which they auctioned for very high prices. Michael Arrington who was involved in starting Pool.com mentioned figures of about a million dollars a month.
So then snapnames.com started with the auction process like pool, instead of a fixed price. But they were not good in competing with Pool.com
Then snapnames.com regained their crown as the king of domains, by striking a deal with Network Solutions. The majority of the very best domains that expired and were worth a lot of money were originally registered with Network Solutions. But that crown was lost in my opinion, when namejet.com took over the agreement to auction expired domains with Network Solutions. I believe namejet.com are the new kings of expired domain names.
For a very interesting take on this subject, I recommend reading the comments in the following post. Yes, anybody who knows anything about domaining, knows that Michael Arrington, due to his involvement with Pool.com is a legend in the industry, it is funny to see people question his knowledge in the industry.

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