Domain names are a scarce commodity and TLD’s (Top Level Domains) like .com are highly sought after.

So, assume that you have a dying desire to purchase a domain and you go looking for it, you often find that there’s a squatter there. Sitting on the registration, doing nothing with it, but looking to exploit someone who wants to purchase it for a princely sum. It is cheap to squat on a domain, about $24 per year. But you may get lucky and someone may pay you thousands for the domain later!

GoDaddy operates a closed auction system where you can list a domain “for auction” but this is an auction like none I have seen before. Recently I tried to purchase a domain and I found this …

Ha! that’s good, I am willing to pay $350 or a little more for this domain, let me “Get this”! Here’s the essence of what I saw …

That’s cool, I have to just bid close to the time when the auction ends and the offer is $350 or more … Should be all set. No indication of a “reserve price” etc., etc., So I bid, I go to bed and I wake up in the morning and here is what I see.

Still the same $350 (though I offered more than that) and apparently there is 1 Bid but the auction now has about three more months to go!

So I called the support folks and here’s what I was told.

  • The owner of the domain decides whether to sell or not.
  • The owner chose not to accept my offer.
  • The owner of the domain relisted the domain for a further 3 months.

And here’s the kicker …

  • I’m still liable for the “bid” to purchase!

At any time the bidder could accept by bid and I suddenly owe them whatever it was that I bid on the domain!


In other words, the way auctions here work is that one party is able to make a material change to the “contract” after you agree to it and you are still bound by this contract? What a scam!

Here is clause 3 of the agreement that you enter into when you offer to purchase the domain. The version of the current agreement is at https://www.godaddy.com/agreements/showdoc.aspx?pageid=6027 and is dated October 18, 2013

“As a Buyer, you are obligated to complete the transaction if you purchase the domain name through a fixed price, Buy Now format, or if you are the highest bidder at the end of an auction and your bid meets or exceeds the minimum bid or reserve price.”

Ok, GoDaddy, I’m happy to complete my side of the transaction.

  1. I am the highest bidder at the end of the auction
  2. I bid the “minimum bid amount” as specified in the auction.

Are you willing to honor your side of this transaction as stipulated in section 3 and 4 of the Sedo agreement?

Section 3 (c)

c) Buyer and Seller shall be liable to each other only for damages that are based upon their failure to perform the necessary steps to complete this transaction, intentional wrongdoing or gross negligence and shall not be liable for claims seeking consequential or punitive damages.

Section 4(b)

“b) In the event that either party fails to perform all reasonable steps necessary to submit payment, complete the transfer of control of the Purchase Object, or otherwise fails to communicate with Sedo’s representatives in a timely manner, Sedo LLC or Sedo GmbH shall have the permission of the Parties to cancel or temporarily suspend attempts to transfer said Purchase Object and to demand the commission from the Party who has failed to complete all reasonable steps necessary to complete the transaction. “

 


After speaking with GoDaddy Support, I was given the offer to provide my feedback and I rated them 0/10. Interestingly enough I got an email that said

Thanks for your call. Tell us how we did!

==========================================
TELL US HOW WE DID!
==========================================

Dear GoDaddy Customer,

Thanks for contacting our Customer Support Department.

Customer service is a top priority at GoDaddy, and we hope our team provided you the first-class service we’re known for. We’d love it if you clicked the link below to tell us how we did during your recent experience.

<link deleted>

Feel like sharing more? You can always tweet your kudos to @GoDaddy, or post them to Facebook at http://facebook.com/godaddy.

[…]

So, sure enough I took to twitter and the following amusing exchange ensued.

What a freaking SCAM!

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9 Responses to Beware of GoDaddy Auctions!

  1. George says:

    I thought GoDaddy was a reliable and trustworthy company, but now I think they are just running a scam with their so-called auction. Isn’t there any regulatory agency that would have authority over these bums?
    George

  2. Jeff says:

    Absolutely shocking to say the least. I’m not sure why people use platforms before understanding how they work. I’m a bit short on time, but you went through a lot of trouble posting screenshots and you seem to really need the help. I hope this bit of education helps you.

    1) I agree that Go Daddy’s auto-renewing 90-day auction is confusing, and they’ve been asked many many many times to change it, but have done nothing. So to determine if a domain is really in an auction, you should note whether it’s “expiring” or “make offer.” If it’s “make offer,” commonsense will hopefully guide you that the owner could reject your offer. This isn’t exclusive to domain names, it works this way for all matters of business. The recipient of any offer doesn’t have to accept it. If the listing says “expired” on the other hand, the owner is not in the picture anymore (though they could reappear and renew up to day 42, and their last-minute renewal will take priority over you winning the auction), but generally if it’s an expiring auction, it means the owner hasn’t renewed it, probably has no interest in it, and if you win it in auction (and they don’t renew it at the last minute) you WILL get the domain at end of day 42. “Make offer” auctions on the other hand are not really auctions, they are “make offer”. No one really understand why Go Daddy lists them as 90-day auctions. It likely was the easiest technical way to integrate these domains into their platform without making technical modifications. In your case, you waited until the very end of the 90 days to make an offer, the 90 days ended, Go Daddy started a new cycle of 90 days. That’s it, there’s no mystery or conspiracy.

    2) You should know that there is something called the “Anticybersquatting Consumer Protection Act” which penalizes cybersquatters. However, unless someone is infringing on a trademark (and not just in your layman opinion, but according to the law), they are not squatters, and it’s libelous of you to refer to them as such. They are simply “domain investors” just like people who buy real estate in hot locations in downtown to sell them later when property appreciates in value. Many large companies own large portfolios of domains that are not being utilized at all. One such company is Yahoo, which we’ve tried to buy domains from in the past for $20,000 and $50,000 and more, but they wanted numbers that will make the hair on your neck stand up (for their completely UNUSED domains). Try calling Yahoo squatters and see what happens.

    3) The contract you are referring to kicks in AFTER the owner has accepted your offer (which based on your post hasn’t happened). Just because you’ve made someone an offer doesn’t mean there’s a contract. They have to say “yes” first, either right away in response to your initial offer or as a result of negotiations, but if you never got a “yes” on both sides, you can’t point to the standard contract and claim that it applies. If the domain was “expiring” then as I explained before the owner (more accurately known as the registrant) isn’t in the picture and your contract is basically with Go Daddy (the registrar where the registrant registered the domain). But the contract (the “I agree” that you click whenever you make a bid) clearly tells you that the owner/registrant has a grace period (day 42) to renew and that your participation in the “expiring auction” is conditional on your acceptance of that fact.

    4) Your assumption that any owner paid $25 for the domain is baseless. Many domain investors buy domains for $5,000 and $10,000 and even $500,000 for undeveloped domain assets and wait until value appreciates much like buying land and real estate. Given your severe lack of knowledge as evident by this post, I doubt someone like you can even figure out what the owner might have paid for that particular domain, so you are only guessing that they paid $25.

    5) I’d buy from a “domain investor” (I don’t call them squatters) who bought a domain to resell it anytime over dealing with a regular owner. If you think regular owners will sell you their domains for cheap, keep dreaming, you’re way too idealistic. Many regular folks either ask for so much or completely refuse to sell, even when the domain is not used, even when they’re made a pretty good offer. Once they find out that someone else wants their domain, in their minds it turns from this blank page they didn’t even remember yesterday to a gem that they will never give up because it’s surely the next Facebook. Regular owners in my ample experience are the worst. They have consistently quoted us many multiples higher than what a domain investor would have quoted us AND we have to chase after them and pretty much beg. A recent nightmare was a domain we were trying to acquire for a non-profit client of ours who has set a $5,000 budget to upgrade their domain. The owner was a regular person who wasn’t using the domain. It took us 2 months and investigative work to get the owner to give us the first reply. They wouldn’t sell, even though they’re not using it, and it didn’t matter that a non-profit organization that’s doing a lot of good would make better use of it and is also willing to pay them $5,000 for it. There are many nightmares like this. I’d buy from a domain investor anytime rather than deal with idiot regular owners, thank you very much. In fact, when buying domains for our clients, we routinely rank domains owned by regular owners at the bottom because we know how much more complex these acquisitions tend to be. When I started, I used to hate domain investors, now I’m happy when I see a domain we want is owned by one, they’re the easiest to talk business with.

    Regarding the domain that you were after, I don’t know what it is, but good luck, you need it. I encourage everyone to try to educate themselves before writing posts like this. Trying to blame your misunderstandings on others is not going to help in any asset acquisition, whether it’s a domain name or a business or anything else.

  3. jun says:

    I used to host my website with Godaddy, which has turned out to be a unwise decision. The website was very unstable and hard to access at that time. In addition, they don’t even have online instant support if you want to seek help!

  4. Justin says:

    You need to understand how goaddy auctions work. That was not an auction you where bidding on but an offer / counter offer. Read the sale type… the min offer would be $350 its up to them to accept or they can hold out for 1203914813 more offers. Its up to that seller.

    Now if it was an auction the sale type would say Public auction and after 10 to 7 days the highest bidder would win that domain.

    They also have a sale type of min offer or buy now. You should really do your home work before you freak out over something sooooo simple!

  5. Jack says:

    I found myself in exactly the same situation. I bid on 2 domains (“Offer/Counter Offer”) one week days before deadline and was surprised to discover that the auction was extended by another 3 months. I called customer support but was told that I am still liable for my bid and have to pay the price even if the owner decides to accept my bid 3 months later. This is total scam, in 3 months domain can loose all it’s links and be worthless… GoDaddy auctions are total scam – basically, by sumbitting a bid you are committing to pay this amount with open ended deadline. Just imaging that you are going to the dealership to buy a new car and give them an offer, then your offer is not accepted but the dealer can make you pay this amount one year later, when the car is old model.

  6. Tim says:

    Something weird just happened. I’ve been working on a new web project for few days. A week ago I checked if the domain with the name we figured out was available and it was. Just a couple of days later it was registered by someone else and now it is in GoDaddy’s auctions. How on earth could someone figure out the same domain name on the same week and decide register a domain? It sounds like the availability searches are somehow used by the ISP’s – or perhaps even GoDaddy themselves – so that they can register the domain before the customer does and then charge ten times more. That is a disgusting way to do business.

  7. Bruce K says:

    I love the folks that have become so inured to Godaddy’s scam tactics that they take to defending them. The key point to be made is that if what godaddy is conducting is “not really” an auction then they should not CALL it an auction.

  8. Max P. says:

    This is amazing! and I’m glad I came across this post. Apparently the GoDaddy auction rules are favoring sellers rather than buyers. That is woefully imbalanced and just plain wrong.

    If the above is factual information, then these should not even be called “auctions”. It’s like an “option-to-buy-under-duress”.

    I have never sold a domain, but I have amassed too many potentially-interesting, idle domains, for which I do not want to pay renewal fees to GoDaddy any more. I am used to and comfortable with the simple eBay auction model. Is eBay a good venue to auction off domains? Another thing I’ve heard is that it is better to transfer my domains to another registrar prior to selling them. GoDaddy complicates the whole sale process too much… Really. If customers’ trust and fairness is violated, nobody benefits. Neither buyers, nor sellers, nor account holders.

    Too many warning signs.

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