Have you ever bid for a website or domain and had the uneasy feeling that the seller himself was bidding against you to artificially push your bidding up? You’d be surprised at how often that happens. Rigged bidding (also called shill bidding) is common in any bidding marketplace and there’s just no way you or the auction platform owners can do much about it.
Shill bidders are a clever lot. They setup new accounts on different IPs. They buy accounts. They ask friends to bid (and they reciprocate the favour when the friend has a domain or site he’s selling).
The net effect of the shill bidder’s activity is that you end up paying a higher price than if the auction was a fair competition among competing bidders. Places like Digital Point, Sitepoint and Flippa seem to make no attempt at shill control. True, they’ll ban you if you try to open another account from the same IP you currently use to sign into their services. But that’s pretty much their own defence. And, let’s face it, pretty useless. We’re talking a webmaster crowd here – people who know their way around using a proxy, people who know how to monitor their IP and are aware when the ISP changes it. If there’s extra profit to be made you can be sure people will try to make it even if the method is dishonest. Bear that in mind the next time you’re bidding – there’s a good chance there’s a shill bidder competing against you.
The latest news is that one of the biggest domain name resellers, Snapnames, has been caught with their pants down. For the last four years or so they’ve had an employee who’s been pushing prices up, causing people like you and me to overpay for our domains … and making Snapnames a huge chunk of extra profit in the bargain.
Unfortunately, many auction sites are designed so that the owner stands to gain if the auction item sells for a higher price. I point no finger at Flippa, I believe they are perfectly honest in their business and above what happened at SnapNames. But, a percentage link between sale price and earnings at the holding company – whether it’s eBay or SEDO – is always going to cause some level of suspicion.
It’s a rough world out there. Take care.