Dispute.com Auction Winner Defaults

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Dispute.com sold at GoDaddy Auctions last week for $65,000. I learned that the winning bidder in this auction defaulted, and this news was confirmed to me by Paul Nicks, GM of the GoDaddy Aftermarket.

The way GoDaddy’s system works on default winning bids is that the next highest bidder would get the opportunity to buy the domain name for the next high bid as if the winning bidder did not participate. If that buyer opts to not purchase the domain name, the opportunity would go to the next high bidder. This continues until a bidder accepts the price and purchases the domain name.

The domain name was sold to the sixth highest bidder in the auction. Although GoDaddy does not disclose sale prices, the company made an exception in this case, and I was told the domain name sold for $38,000. This sale price is just shy of the top 100 domain name sales (year to date) recorded by DNJournal.

I believe the original winning bidder will no longer be able to participate in GoDaddy Auctions. It is a bit surprising that the bidder was able to bid so high and then default. I am unsure if the company will take legal action against the bidder to recover the difference between the winning bid amount and the eventual sale price.

Update: GoDaddy’s Joe Styler shared this comment below but I thought it was important to highlight:

“The reason for default was not that there were not legitimate bids. We are pretty good at making sure that the bids are good on our auctions. The problem was the price and the speed needed to make payment on that amount. Since it is an expired domain we have very little time to collect payment and assign the domain after the auction ends. I don’t want to go into it all but the name is a great domain the people who bid wanted to buy it. Payment speed was the issue. There are restrictions on how much money can leave certain countries in certain timeframes, credit card payments that high are possible but limited. Many banks or customers cannot/will not  process a payment that large. Even a US based winner with cash needs to get the cash to us somehow and with some of the timeframe being a weekend the banks were not able to get the money wired to us in the time we needed. I believe the buyer was someone who could use an AMEX with high limit to make payment in the right timeframe. I think everyone who bid on this name wanted it and could pay, just not fast enough.”

44 COMMENTS

  1. I had a similar $3800 auction loss, and the top bidder failed to pay, so it got a $500 haircut, but this clown kept bidding, and things alive regardless, one more bid, and I might have paid to much for an unqualified bidder, godaddy needs to sue that guy for the other $30K

  2. “I am unsure if the company will take legal action against the bidder to recover the difference between the winning bid amount and the eventual sale price.”

    Why would GoDaddy pursue them legally? If the winning bidder could not afford to pay the winning bid, they likely cannot afford to pay any judgment that GoDaddy might win in a court of law. A lawsuit would be a waste of time and money. GoDaddy was fortunate to sell for $38,000 a domain name that it simply picked up on the drop from one of its own customers for free. GoDaddy shareholders rejoice!

    • My assumption is that to be able to bid that much, GoDaddy must have something to know the buyer can pay (past history bidding, credit card on file, domain names in an account…etc).

      • Yes, they MUST have something to protection the genuine and frequent buyers who definitely ends up paying lot more by not knowing who they’re bidding against. One can argue that you should bid up to where you’re satisfied and don’t think anything else but when I’m responsible to make payment after bidding so is the responsibility of GoDaddy to implement some protection for genuine buyers.

  3. I’m not blaming the new winner but there is always possibility for first and second bidders to hike up the price purposely to become default and eventually 2nd bidders wins like it happened in this case. This way buyer gets a great deal and this tactic can be used for some premium domains like Dispute.com.

    I in no way support this act as it’s unethical and completely wrong.

    • If GoDaddy could prove someone was doing that in an auction, I am sure that would be grounds for legal action since the buyer (who ended up getting the “deal”) became the buyer as a result of his own defaulting. I think you are implying that bidders 1-3 are one and the same, right?

      • I’m saying bidders 1-2 are same and there is possibility of GoDaddy unable to catch and match them for being one identity. This can be setup by 2 people from total different locations with everything different like contact information, email IDs, IP address, etc. And in the end bidder 2 wins the auction. Suppose these 2 people are friends and setup this everything. It’s not impossible but GoDaddy can stop this activity by implementing something like giving security deposit for bidding over 5K or any amount and something more when you bid further more over that amount and so on…

  4. Be it $65k or $38k, still a ridiculous windfall for GD. The real issue here is that GoDaddy is entitled to legally sell a domain name that they don’t own. That domain name belonged to a GD client, he decided to let it expire for whatever reason. That name and any other expired domain should be dropped and become available for registration again, first come first served.

      • I think you’re missing that these drop catching companies (smaller and bigger) where already around in 2002-2003 and everybody could compete with them for the best names. I remember back in 2003 there were guys using own scripts, own computing power to catch valuable expired domains. And this is how it should be. Private individuals and companies competing against each other. They have all the rights to do so, because the system always has been first come first served. They took that away and I have to say it again: Godaddy and others like NetSol have NO right whatsoever to pocket money from expired auctions where they essentially sell something that belonged to their clients. It’s plain wrong.

        • Scripts and the like don’t work today so what you are referencing is irrelevant. These days its mostly Dropcatch.com that gets most pending delete stuff and Snapnames to a lesser extent. I don’t see much difference between Godaddy profiting from it VS Hugedomains (dropcatch.com) or Web.com (snapnames.com).

          • Of course scripts still work today, how do you think Hugedomains and Snap are catching names, by hand? lol… Companies that are offering a backorder service or catch names themselves follow the first come first served mantra because they can only catch a domain when that name is FREE for registration! I don’t have any issues with that.. They invested in computing power, hardware, manpower and that is their ROI.
            Plain and simple.

  5. The reason for default was not that there were not legitimate bids. We are pretty good at making sure that the bids are good on our auctions. The problem was the price and the speed needed to make payment on that amount. Since it is an expired domain we have very little time to collect payment and assign the domain after the auction ends. I don’t want to go into it all but the name is a great domain the people who bid wanted to buy it. Payment speed was the issue. There are restrictions on how much money can leave certain countries in certain timeframes, credit card payments that high are possible but limited. Many banks or customers cannot/will not process a payment that large. Even a US based winner with cash needs to get the cash to us somehow and with some of the timeframe being a weekend the banks were not able to get the money wired to us in the time we needed. I believe the buyer was someone who could use an AMEX with high limit to make payment in the right timeframe. I think everyone who bid on this name wanted it and could pay, just not fast enough.

    • So basically the highest bidder, the second highest bidder, the third highest bidder, the fourth highest bidder and the fifth highest bidder were bidding on a domain they wanted, but could not have paid for within the time frame you require? I don’t see how we’re supposed to find that reassuring.

      Bidders that cannot actually pay, be it due to a tight time frame, wire transfer limitations, etc. unnaturally drive up the price of a domain and the fact that they could not pay means they drove up the price of a domain they never could have paid for anyways. These types of bidders are not legitimate bidders. Their intentions mean nothing, only their actual ability to pay for the domain as per the rules of the auction (which as you suggest, bidder 1, 2, 3, 4, 5 did not have).

      You cannot say that them wanting the domain makes them legitimate, if they are not able to actually pay for it due to various restrictions/requirements. Their intentions don’t mean anything, if restrictions imposed by their own national banking system or requirements set forth by GoDaddy would have prevented them from completing the payment on time.

      Imagine if the highest bidder did pay, in actuality he was bid up tens of thousands by other bidders who would not have paid had they won.

      I wonder how many other times the highest bidder at GoDaddy pays for a domain that the second highest, third highest, fourth highest bidder would not have paid for, due to the same reasons as highest bidders one through five did not pay for this domain.

      Please introduce more transparency to your auctions, like the other auction houses have done since the get go.

      • That is not necessarily the case. An underbidder may have spent their money elsewhere after this auction closed or had second thoughts.

        • I think the fact that they had to go to the sixth highest bidder to find one that was actually willing, and most importantly, able to pay makes this seem somewhat implausible. The auction ended just last week, and now suddenly the top 5 bidders all spent their money elsewhere or all regretted their bids?

          I think it’s highly likely that one or more out of highest bidders 2-5 would have defaulted just like bidder 1 did, had they come out winning.

          • Maybe others who were bidding had more confidence the name is worth what it is worth because others were bidding. As people were notified they could buy it for less because other buyers ahead said “no,” perhaps their confidence in the name (or even the auction house) was shaken.

          • People in auctions tend to get carried away.. Nothing to do with that particular auction buy in general. Sometimes you are happy that you were outbid. Top 5 bidders with buyers remorse seems a bit odd though..

  6. It was a $65k name… How fast do you guys require payment? 48h even on a weekend?? Makes no sense at all imo.
    Takes far longer to go through the bidding list and ask who wants to step in. And even then you still need to secure payment… Why not give the top bidder at least 5 days for wire payment?

      • I think the auction ended August 7th, which was a Wednesday. Why isn’t that enough time to fund payment with a wire transfer? When I agree to buy a domain name, I pay the same day or the next business day.

        • Joe Sytler wrote: “with some of the timeframe being a weekend the banks were not able to get the money wired to us in the time we needed.”

          Makes no sense. If that really is an issue then just don’t let auctions end on Fridays and Saturdays.

          “There are restrictions on how much money can leave certain countries in certain timeframes”

          That is a legitimate concern that needs to be addressed, but you can either block bidders from those countries or give them more time but not just rule them as default and go down the list. bad business.

        • As much as I’d want to pay the same day, there is absolutely no way for my payment to reach GD in even 5 days (I live on the opposite side of the world with a lot of regulations around making large payments outside the country. So your situation does not apply to everyone across the globe!

          • Its not Godaddy’s fault that your country is so restrictive with money. I’m afraid people from certain countries just shouldn’t bid in these big money auctions.

          • @jz what a dumbass reply. Restrictions apply everywhere. And large transfers take time everywhere. If you had to wire the money out of the states it would take 3-5 days even for those from the states.

          • @Aj, no it wouldn’t. I regularly receive and send wires in the five figures from North America to Europe and vise versa and often they are there same day. never longer than next day.

    • Don’t you remember NODADDY.COM? Instead of improving their service, they bought it so they could hide what people really think of them.

      Nothings changed! Same terrible company!

  7. Excuse me if this already has been answered, and I realize this is off-topic, but who was the former owner of dispute.com? Another person who died and neglected to have documentation for his/her heirs to renew? It seems lots of folks have gotten rich over the years via estate pickings. One dead man’s treasure is another live man’s gain.

  8. Seems like a big screw up on Godaddy’s part to need the money in such a short period of time. When the auction ends they are still in control of the name for another 10-15 days so they lost out on an extra 30k when they could have a waited a few more days for the total payment from the top bidder.

  9. One thing missing from Joe Styler’s press release/statement is whether or not the winning bidder’s Auctions account was permanently suspended for failing to pay for the auction he won (ultimately causing GD a loss of tens of thousands). The press release/statement makes it seem like all is forgiven by GD since the winning bidder intended and wanted to pay, and that his “pure intentions” have nullified his breach of his Auctions membership agreement when he didn’t pay. Hopefully I’ve misinterpreted the statement.

    Will we be bidding against this non-paying bidder in future auctions or not, Joe?

    Would be great if that could be clarified.

    • And if that non-paying bidder will indeed be in future auctions I may participate in at GoDaddy Auctions, in the words of Shark Tank sharks, “I’m out”.

  10. Isn’t it ironic that there is now much to dispute regarding Dispute.com! Finally the domain is pursuing it’s higher purpose. Maybe the naive attorney who spent $500K on a bunch of worthless NGTLD’s could have gotten this domain for 7.5% of what he spent on those junk domains.

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