Collusion on Drop Auction Bidding | DomainInvesting.com
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Collusion on Drop Auction Bidding

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During the past year, a few people have mentioned that they received emails from other bidders competing on domain auctions, although primarily involving drop auctions. The competing bidders reached out in an attempt to thwart their bidding, to keep their own acquisition cost down. Judging by the fact that I was told about this, it’s obviously not something that’s appreciated.

There are a number of reasons people reach out, most of which seem to BS. Sometimes it may be to ask the other bidder(s) to stop bidding since it’s a domain name they really want for “personal” reasons. Others may threaten that they are prepared to bid very high, so they may offer their competitor a cut to step aside – or consideration on a future auction. Some may even ask to stop competing and make a joint bid – to be partners in the domain name (a humorous idea considering the situation).

Whether these actions are illegal or just unethical aren’t for me to decide since it probably differs in each jurisdiction and to each person’s values, but there is one thing I can say for certain. It makes some people very uncomfortable to receive emails with requests such as these. Although some recipients may be too polite or politically correct to call someone out in public, it bothered a couple of people enough to mention it to me.

So… if you are involved in an auction, don’t reach out to other bidders. You may think the other guy doesn’t mind or won’t care, but I bet you are probably wrong.


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (26)

    Leonard Britt

    What I see more often at Namejet is that a domain of a certain quality will get bid much higher than it would were it being sold in a domain forum or even at SEDO.

    December 30th, 2009 at 2:28 pm

    DomainShane

    I would pay to have one of my domains thrown in a NameJet drop auction. They usually go for twice what they would go for in a normal auction. Once a name goes to auction it’s bidders and the house. As long as the bidders aren’t the house, it’s pretty difficult to change an auction’s results. Team work is useless, unless the the house is involved. Like anyone else, I bid some auctions up trying to get it and cost the end bidder hundreds, if not thousands, but I was willing to pay it so it’s part of the bidding process.

    December 30th, 2009 at 3:02 pm

    yaron

    how do they know your email?

    December 30th, 2009 at 3:07 pm

    Elliot

    @yaron

    There are many frequent bidders and plenty of people who match up bidder IDs with the Whois info once a domain is sold.

    If you’re asking about how people have found my email, its happened to friends who told me, so I assume its more widespread.

    December 30th, 2009 at 3:13 pm

    don

    Perhaps one solution is that once the auction is started the bidders receive automated id’s that are computer generated, thus hiding the bid identity of those currently involved, assuming there are no shill bidders in the game it creates the illusion of not knowing who u are bidding against in every auction versus the common benfranklin, bonkers, etc of years past…

    December 30th, 2009 at 3:52 pm

    Ed Muller

    As competition for names heats up, weak rules are likely to be ignored in favor of winning at all costs. More unethical bidders will interrupt the process while auction administrators sit by idly not knowing what’s happening or not caring as long as the price goes up.

    December 30th, 2009 at 5:33 pm

    Josh

    Well I can agree that reaching out to a STRANGER and asking them to not bid or not bid as high is tacky and would likely be bothersome, unacceptable, pathetic even.

    However the fact is for many years groups of buyers who are familiar with each others ID’s have done this and happily so… heck Ive done it myself and down the road the favour is exchanged. Of course in a XX-XXX bidder auction it isnt feasible but when you have 2-4 bidders and 2 are friends who you deal monthly with in the industry, why not?

    I don’t think you can demonize the entire practice and the circumstances needs to be considered. There is NO SHAME with the biggest players in the industry, no shame. From adult content, tm names, back door deals before drops, stealing, buying stolen names and pathetic self promotion…cannot imagine anyone being bothered by this that much or have the ethical right to any way. Delete the email and move on.

    December 30th, 2009 at 6:24 pm

      Elliot

      @ Josh

      I can tell you that I’ve been told about this by more than one person, and the recipients of the emails weren’t thrilled about receiving them. If the people were friends or business associates, the story would be different and it wouldn’t have been fodder for a blog post. However, regardless of any circumstances, I think collusion on drop auctions is against TOS of the auction houses.

      And yes, there are a lot of people who have no shame. This is one type of minor issue in the whole scheme of things but an issue for some people nonetheless.

      BTW, your message went to my spam filter because of the XXX in it.

      December 30th, 2009 at 6:59 pm

    Josh

    I agree totally with this being in bad taste when it is stranger, that I can agree about any unsolicited email asking me to not bid or bid less is unwanted.

    I did not realize the TOS of say Namejet prohibited this conduct among bidders, how they could even monitor that is very wishful to start. I would have to say NJ ever hinging something on ethics would be laughable.

    Hey it is what it is, among friends I say all the power to ya, strangers, get a life lol

    December 30th, 2009 at 7:44 pm

    Elliot

    @ Josh

    At least in one case, I think the person who asked thought the other person was a friend, but it pissed him off at the time. LOL

    December 30th, 2009 at 7:46 pm

    jp

    I haven’t reached out to anyone or been reached out to (I don’t think anyone knows my bid handle), but I don’t really see the problem with it, especially among friends.

    @Elliot, for example if Torahs.com showed up at auction and I wanted it, but you called me and kindly asked me not to bid because you wanted to add it to your collection then I would be kind enough to do so, a long as I wasn’t desperate for the domain. Now if it is someone I didint know calling me I’d probably tell them too bad, but still I don’t blame em, you don’t know if you don’t ask. Maybe someone else would step aside in a domain auction for a stranger, but not me.

    December 30th, 2009 at 8:05 pm

    Josh

    @Elliot, that is funny and not uncommon, friends are friends until it comes to a good domain LOL

    I have been fortunate to work with and run into a lot of nice people. One even backed of a bankruptcy auction live over the phone with the judge and lawyers… It is things like this we shouldnt forget and always be open to help when they need it and its reasonable. I find most people are happy to get help but giving is another story.

    December 30th, 2009 at 8:11 pm

    Elliot

    @ JP

    It’s something I personally wouldn’t do. I really wanted Secaucus.com in auction, but David Castello bid against me and I paid $11,000 in Chicago. Perhaps if I asked him to step aside, I may have saved $5k, but it may also have created an awkward situation and/or annoyed him.

    I do think that if it’s a close friend you know very well then it could be a different story (not considering TOS/legal issues). But if it’s not, then you take a chance you’re going piss someone off – or get someone to bid you up just to spite you. I still don’t think I would personally do it though.

    December 30th, 2009 at 8:12 pm

    Josh

    @JP btw sir curious who you are, I see a lot of comments on boards by ” jp ” and since I am known by JP myself I have people getting us confused so I switched to just my name.

    Who are you ?

    December 30th, 2009 at 8:13 pm

    Elliot

    @ Josh

    I agree with you about giving and receiving. It always seems that I am more than happy to help two acquaintances make a deal while asking and wanting nothing for doing it, but as soon as someone finds me a deal, they have their hands out looking for a cut.

    I thought you were known as the banana.

    December 30th, 2009 at 8:16 pm

    Josh

    ” I thought you were known as the banana. ”

    Among other things lol

    December 30th, 2009 at 9:30 pm

    jp

    @Elliot, in response I’d say you just have to be careful who you ask for favors, and of course always weigh the consequences of your actions before asking. Would it have been worth pulling the favor with Costello over $5k, probably not. But what if it was over a bigger ticket item that you just had to have. Might be worth owing him one then. For example, what if the domain Elliot.com, would you ask friends not to bid on that one? I certainly wouldn’t bid against you if you were interested in it.

    @Josh, jp are my initials (Joe Politzer). Sorry if I accidentally stole your handle. I started posting with it about 2 years ago and did my best to make sure it wasn’t in use is ahead of me on many of the community sites.

    December 30th, 2009 at 10:04 pm

    Josh

    @JP No problem, use the handle wisely :)

    December 30th, 2009 at 10:53 pm

    t

    Forums take the facade to a whole different level, with different cliques trying to play the unsuspecting person. Some people use multiple user names and become their own clique. imo most of the people that get played were looking to sell the domain name as their endgame, nothing wrong with that but then the only value they see in it is what the current market will give, and the market is about perception. People use propaganda (remember all the spam) to influence a companies stock with good or bad news to drive shares up if they’re selling or down if they’re buying. The domain market is no different.

    December 31st, 2009 at 9:15 am

    t

    on a more personal level.

    December 31st, 2009 at 9:19 am

    cs

    This is for real as I swear on my mother’s grave.

    Nelson Brady wrote:
    has placed an order on so you might want to consider
    whether you want to bid on it or not in that light.
    ______________________________________
    >> Nelson Brady, Operations Specialist
    >> SnapNames.com, Inc.
    >> 1600 SW 4th Ave
    >> Suite 400
    >> Portland, OR 97201
    >> tel: 503-219-9990 x223
    >> direct: 503-459-5723
    >> cell: 360-903-8844
    >> fax: 503-274-9749
    >> nelsonb@SnapNames.com
    >> _www.SnapNames.com_

    December 31st, 2009 at 1:46 pm

    cs

    In my last post something was left out.

    Before the word “has” was a bidder’s name.
    Between “on” and “so” was the domain name.

    The bidder was abig corp and the idea suggested was to keep me from wasting money in a bidding war.

    December 31st, 2009 at 5:20 pm

    t

    its happened more than once where a huge company lost to another bidder only to come back and pay more,.imo take a chance,.
    but when someone in charge of the auction advises you not to, well then your kinda screwed,
    unless its worth getting your lawyers involved to make sure the referees (auction people) play by the rules.
    you will have an edge cause you can make a decision to pay more than your cap on the fly, where as their decision maker doesn’t have that discretion. Best strategy is Surprise, especially in a timed situation as an auction. I am talking about 6 and 7 figure domain name sales. As for less expensive domains you’d most probably lose the auction so id suggest another strategy,.. most people play business like a game of checkers limiting their scope, Businesses play chess, always thinking a few moves ahead.
    aaargh I always mean for my posts to be as short as possible, Id say I’m long winded but I smoke two packs a day.

    January 1st, 2010 at 4:28 am

    Freddy

    @Leonard the difference with Sedo and Namejet is that 99% of the time you are bidding on a domain that you can purchase. I’d say it’s about 80% of the time with Sedo.

    Oh we are all competitors. If this makes you upset consider that this request not to bid is one guys way of trying to beat you to a domain. . .the “poor me” story approach. If you think a domainer is your friend, the reality is you are the biggest fool of all. A domainer would cut your throat to get a domain before you. Anything for a buck.

    January 3rd, 2010 at 1:16 am

    John Doe

    It is an open market and if someone ones to reach out by an email, let them and just delete without a response, but good post for public awareness.

    January 16th, 2010 at 8:34 pm

    Bob

    Called a friend about an auction? Done that! Offered a ‘mulligan’? Done that too! Backed off in an auction after a friendly conversation? Yep, that too!

    Is any of that illegal or immoral? I don’t think so – just common sense sometimes. We live in a small pond, and there’s nothing wrong with giving a friend a break once in a while.

    Do I expect a ‘payback’? Not really, maybe just a little goodwill. And if they ever feel like returning the favor down the road – that’s OK too! 😉

    February 11th, 2010 at 5:02 pm

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