Domain auction site faces shill bidding lawsuit

An employee of SnapNames.com auction site was bidding against customers, the lawsuit says

A Miami lawyer has filed a class-action lawsuit against domain name auction site SnapNames.com, after the company announced that a former employee was bidding against potential customers in domain name auctions.

Attorney Santiago Cueto filed the lawsuit Monday in Miami-Dade County Circuit Court on behalf of his brother, Carlos Cueto, and others who participated in SnapNames.com's online auctions. The lawsuit alleges that a former vice president at SnapNames.com secretly bid on tens of thousands of domain name auctions over the past four years, leading to falsely inflated prices.

Some of the SnapNames auctions run into the tens of thousands of dollars, Santiago Cueto said. His brother, who owns about 3,000 domain names, has long suspected shill bidding in some domain name auctions, he said.

"He's been frustrated by the process for years," Santiago Cueto said. "I think the entire industry needs to be cleaned up."

SnapNames.com, a subsidiary of Oversee.net, sent out notices last week that it had discovered the employee bidding on domain name auctions. SnapNames, which resells expired domain names, calls itself the largest resale marketplace for domain names. The company runs hundreds of auctions a day, it says on its Web sites.

In a notice sent out last week, SnapNames said the shill bidding affected about 5 percent of all its auctions since 2005, with most of the activity happening between 2005 and 2007. Some auctions in 2008 and 2009 were also affected, it said. The former employee won the auction in less than 1 percent of the cases, the company said.

The company recently "discovered that an employee had set up an account on the SnapNames system under a false name and, under this name, bid in SnapNames auctions," it said in the notice. "This is a clear violation of our internal policy and was not approved by the company."

SnapNames will offer rebates to affected customers, with an independent auditor determining the rebates on a case-by-case basis, the company said.

SnapNames representatives weren't immediately available to comment on the Miami lawsuit.

Cueto called domain names "the last frontier for the average person to stake their claim on some very valuable property."

While his brother is the only plaintiff in the lawsuit so far, Cueto expects other bidders to join. The Cueto Law Group will also explore legal actions against other firms suspected of similar activity, he said.

"A lot of people are saying, 'Aha, I knew it,'" he said.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags domain names

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Grant Gross

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Kurt Hegetschweiler

Brother PocketJet PJ-773 A4 Portable Thermal Printer

It’s perfect for mobile workers. Just take it out — it’s small enough to sit anywhere — turn it on, load a sheet of paper, and start printing.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?