The Freename Forum

In a recent article, GoDaddy employees Bartosz Mozyrko and Mihai Nicolae explain what the US registrar is doing to combat so-called ‘shill bidding’ in domain auctions.

Shill bidding in domain auctions has always been a problem. The price of a domain is driven up by false bids. There are several forms of ‘shill bidding’: on the one hand, the seller of the domain can bid during the auction in order to drive up the price - possibly using their own fake accounts. On the other hand, several bidders can work together with the seller and jointly drive up the price. In this case, the bids also have the effect of fooling genuine bidders into believing that there is increased demand for the domain and that a high price is justified. A third variant is based on the buyer, who initially bids low under various accounts and then drives the price up by leaps and bounds. This can also be achieved with several collaborating bidders. The aim is to drive low bids to unreasonably high amounts in order to prevent genuine buyers from placing bids or cancelling them. If the highest bidder does not pay, the second highest bidder may be awarded the contract at a significantly lower price.

The effects of bait-and-switch bids go beyond financial losses on all sides. On the one hand, customers lose trust. On the other hand, GoDaddy faces the problem of reduced revenue as domains are sold below their market value, and the burden on resources increases as fraudulent accounts and communications need to be managed. For these reasons, GoDaddy has been busy this year and outlines in the article ‘How GoDaddy Auctions Fights Fraud to Increase Customer Trust’ what measures have been taken to combat bait-and-switch abuse.

Automated rules have been implemented to prevent bait-and-switch bids and bidding behaviour is now monitored to identify potential bait-and-switch bidders by tracking unusual activity, payment discrepancies and suspicious bidding patterns. Buyers must now fill out an extensive form for auction membership, which also requires proof of identity before they can bid. Since April 2024, a special account verification process has been in place to prevent people from creating multiple accounts for fraudulent purposes. This method has replaced verification via PayPal. A dynamic bid verification system flags suspicious bids before they are placed. After implementing these components, GoDaddy noticed a significant decrease in bait bids. In the event that bait bids do occur, GoDaddy works to identify the wrong bidders, cancels their bids, suspends their accounts and communicates with legitimate customers to restore their trust. GoDaddy continues to work on expanding fraud protection. In a list, they show the development this year and announce that they are currently working on the development of technology for machine learning and automation to detect and prevent fraudulent behaviour.

The article ‘How GoDaddy Auctions Fights Fraud to Increase Customer Trust’ can be found at:
https://www.godaddy.com/resources/news/ ... omer-trust