For Sale Enom encourages auction fraud

[Jack Gordon]

as a matter of principle, I have avoided getting into drop-catcher auctions so far. but it seems to me that it is overkill to require a deposit on each auction, vs. a general deposit that rules how high one is allowed to bid at any given time, say 10%.

in other words, if you want to bid $10k on an auction, you must have at least $1k on deposit. any time you, as a high bidder, default on an auction (any auction), that deposit is forfeited, up to the value of the default. If it happens to be enough to cover that auction, the domain can be awarded. if not, it is an expensive lesson in life and a kick in the pants out the door.

along with verified identifications, this seems like it would create accountability. enom would also be helping its own cause by building more transparency into the process, as I think that will be necessary for long-term customer confidence (i.e. survival).

how do the big brick & mortar auction houses deal with this issue?

 

[cambler]

No one is ok with that.

Really? Everyone agree?

Chris, what do the folks at Enom, AFTER hearing all this have to say?

After hearing what? We all agree that there's a problem when a bidder doesn't pay. We all agree that something should be done.

Some think that bidders should require positive ID and be banned if they fail to pay. We've done that.

Some thing that bidders should have a non-refundable depost. Apparently you don't. Let's take your point, then, and presume that we don't have a non-refundable deposit.

Then what?

We can't just give it to the next-highest bidder, because that creates an unfair situation in which someone might have increased their bid and/or their proxy based on the second-highest bidder, but did not because of the fraudulent top bidder.

What would you propose otherwise?

Do tell, and then we can see what those in charge think. Until then, I've not heard a proposal.

how do the big brick & mortar auction houses deal with this issue?

They require that you pay before you leave. If you do not, there's a lawyer sitting there to remind you that you signed a bidding contract and you should expect a suit if you do not pay.

Online, that's a little more difficult, especially when the bidder is in another country. For B&M, you have to step foot on the soil of the auction house's country and agree to the laws of that locale.

I suspect there are a few lawyers here who could elaborate if I've missed anything or am wrong.

 

[Fearless]

You are apparently not thinking outside the box.

In this case, party A puts in a bid for $100, and parties B and C, fraudulent bidders, put in proxies of $49,900 and $50,000, respectively. They do this as quickly as possible, thereby discouraging other bidders.

The solution is to require B and C to have a deposit that would be forfeited. Party B would be irrelevant in this case, and party C would forfeit their deposit, and, nominally, the auction would restart with Party C's bid removed.

Party B would then be on the hook, and would find their deposit forfeited in the next round.

Then, in the third round, presumably, all would be normal.

Now can you see why Party B would be contacted by eNom? And can you also see that these fraudulent bids would slow things down considerably?

All we lack right now is the non-refundable deposit. So I ask again - would you be okay with that?

This is why you have logical minds run an auction. "Fraudulent bidders, put in proxies of $49,900 and $50,000, respectively." Hello, we have fraud here.

In your example, you collect $50K or $500 default deposit from the winner. Winner defaults, you collect $49.9K or $500 default from the runner up. Runner up defaults, you use common sense and realize you have a scam going based on the proximity of bids. You throw the 2 fraudulent bidders out of your system and start the auction over.

With all these big bucks Enom is making you'd think they could afford an auctioneer consultant. Auctioneering is nothing new. I'm sure auctioneers have had to come up with fraud solutions. One thing for sure, no legitimate auctioneer would allow a non-payer to continue bidding time after time.

 

[Theo]

We need to have a third party created with high business ethics to take the place of all the current scumsucking leecher registrars-gone-bazaar-merchants.

Anyone care to join me for a business plan?

 

[cambler]

In your example, you collect $50K or $500 default deposit from the winner. Winner defaults, you collect $49.9K or $500 default from the runner up. Runner up defaults, you use common sense and realize you have a scam going based on the proximity of bids. You throw the 2 fraudulent bidders out of your system and start the auction over.

You see, I agree - and that's what I was wondering, but just three messages above, we have someone saying that "everyone" doesn't agree to non-refundable deposits for fraudulent activity.

So which is it?

We need to have a third party created with high business ethics to take the place of all the current scumsucking leecher registrars-gone-bazaar-merchants.

Anyone care to join me for a business plan?

When you write it up, I'd love to see it. Make a foolproof system, and I suspect you'd have a shot at getting every drop-catcher as a customer.

 

[Fearless]

You see, I agree - and that's what I was wondering, but just three messages above, we have someone saying that "everyone" doesn't agree to non-refundable deposits for fraudulent activity.

So which is it?

Sorry I assumed you read all of the first post in this thread.

I have a simple solution for Enom that would allow them to keep their present system. Require a $500 deposit to bid if you're bidding on any name in excess of $500. Then if the bidder doesn't pay take the $500 and approach the runner up with an option to buy the name for $500 less or $100 over the last legitimate bid, whichever is less.

 

[nitronet]

How about this?

Seperate Club Drop from the rest of your Enom account.

Provide a credit card which is automatically charged at the end of an auction and then it would have nothing to do with the "points" in your reseller account.

Enom would charge your card immediately just like Pool, Namewinner, and Snapnames.

If your card is declined and you don't make it good then you are out of Club Drop.

That would seem to solve most of the issues.

How can we get some feedback from Enom about the wrongful 3% surcharge, I wrote to Matt Stern weeks ago about this and never got a response.

 

[Theo]

Don't even dare question the 3% fee - they will close down your account if you tell your CC company.
Use other registrars if you're not willing to pay this "convenience fee" - or pay Enom by check.

 

[cambler]

Sorry I assumed you read all of the first post in this thread.

I have a simple solution for Enom that would allow them to keep their present system. Require a $500 deposit to bid if you're bidding on any name in excess of $500. Then if the bidder doesn't pay take the $500 and approach the runner up with an option to buy the name for $500 less or $100 over the last legitimate bid, whichever is less.

With the exception of the $100 over last legitimate bid, I would agree. I disagree on the $100-over, simply because a slew of fraud would mean that there were most likely legitimate bids that were not placed because the top bid was above what the legitimate bidder would have placed.

But I agree, you're on to what I think is a reasonable solution.

 

[nitronet]

Don't even dare question the 3% fee - they will close down your account if you tell your CC company.
Use other registrars if you're not willing to pay this "convenience fee" - or pay Enom by check.

Has Enom really closed down accounts in the past for this?

 

[Josh]

Really? Everyone agree?

Some think that bidders should require positive ID and be banned if they fail to pay. We've done that.

Some thing that bidders should have a non-refundable depost. Apparently you don't. Let's take your point, then, and presume that we don't have a non-refundable deposit.

Then what?

We can't just give it to the next-highest bidder, because that creates an unfair situation in which someone might have increased their bid and/or their proxy based on the second-highest bidder, but did not because of the fraudulent top bidder.

What would you propose otherwise?

What's wrong with restarting an auction from $0 after the high bidder has refused to pay? Or restarting the auction to the dollar amount before the fraudulent high bidder first bidded?

 

[cambler]

Provide a credit card which is automatically charged at the end of an auction and then it would have nothing to do with the "points" in your reseller account.

Enom would charge your card immediately just like Pool, Namewinner, and Snapnames.

If your card is declined and you don't make it good then you are out of Club Drop.

There are legitimate and regular bidders who pay upwards of $25,000 for names by wire transfer, and do not have credit cards with $25,000 limits. Requiring them to deposit 25-large ahead-of-time is cumbersome (and I wouldn't blame them if they wanted interest).

I like the idea of deposits - it adds a penalty for defaulting, and $500 is not too much for those representing that they're willing to pay $5,000 and upwards for a name.

 

[Josh]

Chris,

In addition to a financial penalty, what's wrong with restarting an auction from $0 after the high bidder has refused to pay? Or restarting the auction to the dollar amount before the fraudulent high bidder first bidded?

 

[cambler]

Chris,

In addition to a financial penalty, what's wrong with ... restarting the auction to the dollar amount before the fraudulent high bidder first bidded?

We do this now, but take the auction public at that point, to ensure that nobody else in the private auction was in collusion with the fraudulent bidder. I realize that there are those who disagree with this policy.

 

[Josh]

We do this now, but take the auction public at that point, to ensure that nobody else in the private auction was in collusion with the fraudulent bidder. I realize that there are those who disagree with this policy.

No, auctions are not restarted from $0 when they become public. They seem to be restarted at the bid amount directly below the high bidder's.

Shouldn't the auction either be restarted from $0 or restarted from the high bidder's entry point into the auction?

 

[nitronet]

We do this now, but take the auction public at that point, to ensure that nobody else in the private auction was in collusion with the fraudulent bidder. I realize that there are those who disagree with this policy.

It goes public for only one reason - to make sure Enom has the potential to earn the most revenue from the auction which is why they are probably pleased when payment isn't remitted to them.

 

[cambler]

It goes public for only one reason - to make sure Enom has the potential to earn the most revenue from the auction which is why they are probably pleased when payment isn't remitted to them.

Well, I suppose there's no reason to discuss it any more, then, since you seem to know exactly what happens and why. I'm sorry I've wasted your time. Come on by Monday and you can have my desk.

 

[nitronet]

I don't need your desk nor do I want it.

I've been retired for a long time and like it that way, I simply call a spade a spade and don't sugar coat anything and don't buy bull---- either.

Have a nice day.

 

[Steen]

Also start posting the names (email addresses, IP addresses, etc.) of deadbeat bidders.

That's insane.

 

[GeorgeK]

Folks can still deposit the $500 fraudulently up front (e.g. stolen credit cards). That's why a "Wall of Shame", with their WHOIS info (true name, IP address used for bidding, email, etc.) acts as a further penalty, i.e. a reputational one. It also keeps eNom honest, because if we see those "Wall of Shame" folks catch a $200 name later, then we know they weren't really banned...

Oh, and if they want to get removed from the "Wall of Shame", the fee can be $500, paid via Wire Transfer.

The "Wall of Shame" is not defamatory, as it's based on truth -- failure to honour one's bids.

In essence, eNom is extending unlimited free credit to those who are bidding. A bank wouldn't lend just anyone $100,000 -- they'd want to see some credentials. NameWinner had a great system (no sure if it is still in effect), where one could earn a credit/bidding limit, based on one's TRANSACTIONS history. Building a track record can take time, though, so one could always apply for a higher bidding limit, by showing some credentials.

A guy like Greg could have a $200,000+ limit -- I'm sure he's good for more. A $100,000 limit would be sufficient for me (haven't seen too many names worth bidding more than $50K of late), but if sex.com mysteriously dropped, we could all apply for higher limits. arty:

Establishing credit/bidding limits takes time, though, but not as much as one would think. When a "great" name drops, it's usually the same 100 or 200 bidders on eNom that all have it on their lists. It wouldn't take more than a week or two to create limits for all the "regulars".

An alternative to the non-refundable deposits is to have credit checking going on everytime an auction hits a certain number. Say $5,000, as an example. A new phase could be started for those auctions, with a new "end date". For simplicity, let us give it a name like "Platinum Auctions". Folks would need a higher "credibility" to enter those Platinum Auctions.

Thus, for instance, we might have 76 bidders initially, and then after 29 hours, abc.com hits $5,000. It then goes into "Platinum" mode, and everyone who is not a Platinum bidder is cut out of future bidding on that name. Thus, it would show there are say 15 bidders left. The auction is extended by an extra 1 or 2 business days, to allow any non-Platinum certified bidders to get certified. Real bidders usually wait until the end, anyhow, so adding 1 or 2 business days won't make a difference (the domain does continue to stay "Private", all throughout, though, so you can't borrow a friend's Platinum credentials to enter the Platinum auction.

I'm sure others have ideas too, though....just tossing some out there. The main issue, though, is credit limits.