An update on domain name marketplace gaming

Namecheap is making progress, but the industry has a long way to go.

Four hands holding up bidding cards. Two have the word "bid" on them, and two have "fake bid".

Last month, I wrote a post about domain name auction gaming. It started with, “Bidders are right to be upset, but solutions can be controversial, too.”

Indeed, when Namecheap announced new measures this week to increase transparency, some people thought it went too far.

Namecheap now identifies buyers by spending level, grouping them into bronze, silver, gold and platinum levels. And it’s going to show when that bidder joined the marketplace.

That’s not controversial. But some people are concerned about Namecheap showing exactly how many auctions they’ve won.

In my book, it’s better to do a bit too much and dial it back than to do too little.

Consider what’s going on at GoDaddy. In a post on NamePros today, NameBio’s Michael Sumner pointed out recent sales where two bidders escalated prices quickly, only for the top bidder to back out. For example:

When the high bidder doesn’t pay, the runner-up gets the domain at the price they would have paid had the other bidder not participated.

That might seem fair on the surface, but it is allowing people to game the system. They create two accounts, escalate prices quickly to knock out other bidders, and then get the domain at the price they started the game at.

After domain investor Hiren Patel referred to this on Twitter, GoDaddy replied that it is stepping up manual processes to fight this and is working on “enhanced verification methods” for the future.

In the short term, marketplaces have a disincentive to cut down on shilling and bad behavior. It cuts into their profits. But in the long wrong, people will stop bidding as much if they think they’re getting screwed.

That’s why took drastic measures in auctions on its site. People lost trust, so the company stepped in to wipe out bad behavior. It started pre-authing credit cards for each bid. This eliminated almost all gaming.

Kudos to Namecheap and Sav for stepping in to fix these issues. It gives me more trust when I bid on these platforms.

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