Domain Auction Acts of Impropriety

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An important discussion continues to be had at Mike Berken’s blog regarding companies who participate in their own drop auctions. The short summary is that Mike bid on (and won) 23 drop auctions at Tucows, only to be told later that the names were part of Tucows’ portfolio. Apparently these names were accidentally listed during Tucows’ transition from their auction platform to Afternic’s.
These domain names were taken out of Mike’s account, after he paid for them, and the only compensation he received was an apology and a refund. Nothing was given to Mike to compensate him for his time searching for these domain names and his time bidding on them. Mike is no spring chicken when it comes to the domain industry, and judging by the quality of names Mike has and continues to purchase, these were probably significantly valued domain names.
The conversation has turned into one about ethics, and the discussion moved to whether employees should be prohibited from bidding on their company’s auctions. While I think it is necessary that domain companies hire people who know the domain industry, I think employees should be prohibited from bidding on their own company’s auctions – or on domain names where their company could benefit from the results (ie: registrar who outsources domain drops but profits based on the final sales price).
Denying a company employee access to various stats or proxy bid information for a domain name isn’t the remedy. As long as there is the appearance of a possible conflict of interest, there is a problem. As domain investors, we could be getting screwed without even knowing it.
I think this is a conversation that needs to be had, and all domain auction houses and drop companies should pay attention. Check out the discussion on Mike’s Blog when you get a chance.

1 COMMENT

  1. “As long as there is the appearance of a possible conflict of interest, there is a problem.”
    I think here’s the key issue. To ignore the Tucows issue for a second, and look back at TDNam, here’s where we see the problem. I think we can all agree that Adam Dicker is a domain buyer, and a strong figure in the industry. But you hit the nail on the head, there’s an appearance of impropriety, and that’s enough.

  2. Every Domain Company and Auction House should follow Bido.com House Rules; I applaud Bido.com for having its House Rules published on its site! FOUNDERS, EMPLOYEES and RELATIVES are not allowed to bid or participate in auctions-now that’s the way this industry should be operating with full disclosure and integrity.
    FYI: post #43 at the domains.com!
    Additional comment; ARE YOU KIDDING ME, Tucows should transfer back those 23 names to Michael.

  3. Elliot
    Tucows responded today and we find out that there are 25 domainers that Tucows took domains from and there were 260 domains in total.
    I have made another post on this important issue based on Tucows response

  4. All 25 domainers should get their domains back, if not, I would recommend everyone to spend their money elsewhere where this type of unethical activity doesn’t take place.
    Tucows should do the right thing and give the domainers their names back and put this to bed, if not, this type of publicity perhaps will cost them millions in the long run.

  5. Elliot,
    Allowing employees to bid on their own auctions is out of line!!
    I think people are left wondering if the employee bidding was simply to rise the prices of the bids on the auctions or if the employees were real bidders?
    – Richard

  6. For this very reason, I have suspended any aftermarket bidding, at least for now. I bid on and won my last aftermarket domain in late March. It is now being used for a forum.
    After thoroughly researching similar names, I simply set my proxy bid and walked away from the computer.
    Was there shill and/or employee bidding involved? I don’t know and will probably never know. All I know that there were 50+ bidders, about 10 were serious bidders.
    Did I get it for a decent price? I think so. Three weeks later a similar domain (not as good) went for 6 times the price I paid.
    I was shocked and wondered about that sale; that domain ended being a redirect to another page.
    There needs to be aftermarket watch dog agency that is NOT made up of people from auction houses–you just can’t have people with special interests policing themselves.
    In any case, I now do thorough research before even thinking about bidding on the aftermarket.
    I have noticed, Ken, that every company has a policy regarding employee and relative bidding.
    But I have also been around long enough to know that real policy occurs in the 2008 version of the smoke-filled room.
    “Love everyone, trust no one.”
    😉

  7. The Board of Advisors of WADND.com are now officially considering and voting on rescinding the “Seal of Approval” awarded to Tucows.

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