In a huge breaking story for the industry that will continue to unfold over the next hours and days, Oversee.net the parent company of SnapNames.com, recently discovered that a now former employee has been shill bidding on Snapnames.com auctions in violation of the company’s policy for many years.
This employee who was not identified by name, but is described as a long time employee of Snapnames.com, having worked for them prior to Oversee’s purchase.
This individual appears to be well know, highly trusted former employee of Snapnames.com at the highest level, and I think most of you could make a good guess as to his identity.
Snapnames first learned about this situation a few weeks ago and hired a lawfirm and a forensic accountant to go back through over 1 Million domain auctions spanning several years and found that this former employee participated in as many as 5% of all SnapNames.com auctions.
Oversee to its credit is being very proactive on this issue and will announce today that it has already set up an escrow fund to be run by a third party administrator, to rebate all effected customers, with the amount overpaid for winning auctions, due to this former employee’s bidding, plus interest, which customers will be able to take in the form of cash or credit.
Credits will be issued for the buyers that won any auction in which included this ex-employee, and the rebate will be computed by disregarding ex-employee bid for purposes of determining what the actual selling price would have been, resulting in a credit for the overpayment back to the buyers account, plus interest from the date of the auction.
Jeff Kupietzky President of Oversee says that 75% of all of the affected auctions took place before Oversee acquired SnapNames.com.
This now former employee, bid on domains with three results: Some of the domains in which he was the winning bidder he simply paid for and kept for his own account in violation of company rules; in other instances this former employee requested and received a refund from Snapnames.com for his purchase, and in most cases simply bid to drive up the final prices to meet certain goals and/or bonuses.
If you are a bidder that was effected by this ex-employee’s shill bidding, you will receive an e-mail today from Snapnames.com telling you about this most unfortunate situation and you will in addition be receiving an e-mail from the third party administrator that has been set up to handle the escrow account.
We have to applaud Oversee for coming public with a solution already in place, especially since they probably could have taken care of this internally and no one would have known.
There has been talk in the domain community for years about shill bidding taking place at all the auction houses, but this is the first time an auction house has gone public with the information and a solution.
I’m sure there will be a ton of news on this today from many sources.
We are on top of it and will be updating this story as additional information becomes available.