When I won an auction a few weeks, which exceeded $5,000 (actually the domain exceeded $20K) I got an e-mail from NameJet.com with wiring instructions for payment and this stern warning:
“”If we do not receive your wire within 7 days we will put the domain up for re-auction and we will charge your account an administrative fee of $10″””
Well needless to say I was scared to hell. Should I risk a fee of $10 or should I just pay my $20k+ bill in full?
These are the difficult questions we have to face everyday.
This got me looking seriously into NameJet.com continuing problem with non-paying bidders and the ramifications that such non-payers have in the overall auction.
In the last few weeks I also got a few calls and e-mail from other domainers who have seen some issues they did not like arising from non-paying bidders at namejet.com
First let’s try to define what a non-paying bidder is.
When you establish a NameJet.com account you have to place a credit card on file.
It is unclear if NameJet just determines that its a real card and the zip code matches the billing record, or if any authorization is made to test the available limit on the card.
Any auction where the winning bid is priced at $4,999 or under, NameJet.com bills the credit card on file.
If the card does not take the charge, another attempts are made on other days to charge the card.
It is not clear how many days the charge is attempted before the domain is re-auctioned.
Any auction where the winning bid is $5,000 or more, the winning bidders is required to wire in the funds and the winner is given 7 days to get the funds wired in.
There are several issues that arise due to non-paying bidders and great unfairness that results to all other innocent bidders.
1. If a winning bidder does not pay for an auction at NameJet.com currently, the domain goes into a public re-auction where it is resold to the highest bidder. The re-auction is not limited to those who participated in the closed auction the first time, which was opened to only those who backordered the domain by the deadline. Instead the whole world is invited into the public auction caused by a non-paying bidder, potentially leading to a much higher sales price achieved in the first auction.
This is clearly unfair to all others that were in a closed auction, only to be beat by a non-paying bidder.
Godaddy.com in the case of a non-paying bidder, offers the domain to the second highest bidder, without regard to the non-paying bidders, bids. So if you bid $10 at Godaddy.com with a $110 proxy and the non-paying bidder, bids $120 and wins the auction, Godaddy will offer you the domain for $10 in the case of a non-payer in that example.
This seems to the fairest resolution to the issue.
However NameJet.com, does not offer the domain to the second highest bidder, nor do they re-auction the domain only amongst those who were involved in the closed auction, but instead opens the auction to all.
Let’s be clear here.
Qualifying bidders and monitoring them, including requiring cash deposits, prepaid credit card deposits or other measure to ensure payment, is one of the obligations of the auction house.
A non-paying bidder is not the fault of the other bidders.
Bidders need to know they are bidding against real people, who have an ability to pay and if someone fails to pays the auction house, it should be the auction house, not the other innocent bidders, that should suffer any loss.
So the domainer community needs to demand change.
In the case on a non-paying bidder, our first choice would be that the domain get automatically awarded to the second highest bidder, without regard to any bid placed by the non-paying bidder.
Our second choice, is that the domain get re-auctioned in the same closed auction as the first auction, with the starting bid on the re-auction to be the highest bid, without regard to the bids of the non-paying bidder.
Our third choice, there is no third choice.
There is no justification for inviting new bidders who could not bid in an closed action to now participate because the auction house did not screen and/or monitor bidders.
The auction house should not be allowed to profit additionally from a non-paying bidder.
Bottom line, end of story.
2. Namejet.com does not seem to have a set rule of when a bidder is disqualified from bidding, or what it takes to have his account suspended or shut down. It is not clear how many non-paying bids it takes to get your bidding account suspended or terminated. Clearly that number is more than 1.
To NameJet.com’s credit they have responded to domainers, on a case by case basis and has shut down accounts after domainers have complained about a certain non-paying bidders,
However NameJet.com should monitor there own non[paying bidders, follow establised rules and will shut down or suspend accounts on its own, without complaint.
The e-mail I received did not talk about, or even threaten that if I did not pay for the domain, that my bidding privileges would be suspended or revoked. If you account is not closed or suspended for failing to pay at $20K+ bid what does it take?
And why do we not know this?
NameJet.com needs to adopt and announce a straight forward policy’s on these issues. There needs to be clear policy that after 1,2 or 3 non-payments your bidding privileges are revoked until cash depoists are made on the account.
On eBay.com the number is 3. You don’t pay for 3 items on eBay.com and they shut your account down.
What is NameJets.com number?
3. A non-paying bidder is continued be allowed to bid in other auctions. This situation came to me from another domainer who tracked all the auctions he was involved in, whether he won or lost, and kept record who he was bidding against.
Here’s what he found.
A bidder let’s say who defaults in paying an auction he was high bidder on, continues to bid on other auctions. So the innocent domain bidder is saying to himself in a new auction, why should I bid against a guy who didn’t pay for his last domain. After all if your not going to pay, you can just push the domain price up and up, as there is no downside and no ability to pay.
Lets say a guy bids on 20 domains during a 7 day period, wins 2, loses 18. He doesn’t pay for the 2 he won.
All other bidders in the other 18 auctions are bidding against this guy, increasing the eventual selling price of the domain. Increasing the amount they paid for the domain.
We would all be pissed off if we realized this was happening.
Well it is.
So using my example what Namejet.com will do, in the situation I described is re-auction off the 2 non-paid domains, in a public auction, open to all comers, and let stand in tack all the auctions where the non-bidder lost, even if he was the second high bidder.
Now if a guy is the high bidder on a $500 domain and can’t pay for it, because the credit card on file will not process, why is the guy continued to be allowed to bid on other auctions? And if that person winds up not paying for the domain at all why should any of his bids placed around the time of the non-paying bid, be honored?
Simply it should not.
Out of fairness to all bidders, if a bidder winds up not paying for an item, all bids placed by the guy within a reasonable period, say 7-10 days, should be voided and this should be done by NameJet.com under its own volition, and without the complaint of other bidders. NameJet should notify winning bidders that there was a disqualified bidder participating in the auction and the final auction price paid by the winner should be reduced down to the level it would have been disregarding all bids by the non-paying bidder.
In essence Namejet should notify its customers that he was bidding against a non-paying bidder which caused the price he paid to be more than it should and NameJet should credit its customers with the overpayment caused by the non-paying bidder. What a great way of building up Namejet’s credibility.
This is only fair for all bidders on Namejet.com
And above all, auctions have to be fair to all participants.
While most of the domain sold on NameJet.com, wind up getting paid for by the winning bidder, there has been almost every week, a few higher priced domains, that are put back for auction for non-payment.
Just this last week I noticed that several domains including, keywest.com (second re-auction), tvstation.com, bargainhunt.com, wantedads.com went back up for re-auction all having a four figure selling price the first time.
This is way too many.
Namejet.com needs to announce firm policies on all these issue to bolster confidence in the auction.
If Namejet.com fails to act they do so at their peril.
We have brought these issue to there attention, but its your turn.
Many of you arre active bidder at NameJet.com.
Some of you spend a lot of money there every month.
You need to let Namejet.com that these issues are important to you and vital to your continued participation.
I do believe they are willing to listen and if you make your voices heard we can get a lot of these problems solved.
If you stand in silence they will only escalate, which will only hurt the aftermarket, the domain industry and domainers who are forced into bidding against known non-payers or just walk away from the auctions.