More Fraudulent Bidding Activity at DropCatch.com

[Arca]

DropCatch.com just can't get rid of fraudulent bidding activity on their platform. Fraudulent bidders bid up prices, don’t pay when they win, and then the names are re-auctioned again and again until a legit bidder wins.

It is a win-win system for DropCatch. If the fraudulent bidders bid up a legit bidder, DC cash out even more thanks to the fraudulent bidder driving up the price beyond where it would have gone with only legit bidders. If the fraudulent bidder wins, they simply hold and re-auction the name over and over until they get a legit bidder that pays. It's a problematic system for regular bidders, because before these fraudulent bid handles get suspended, they bid up legit bidders in various auctions.

DropCatch's system enables them to get paid for names even with so many fraudulent non-paying bidders on their platform. But even with this auction restarting system in place, there are simply so many fraudulent bidders that they sometimes struggle to find a legit winner, despite multipe re-auctions. Take CannaMarket.com. The domain has already been won by THREE DIFFERENT fraudulent bidders. The first winner, in the original auction, was fraudulent. The name was re-auctioned. The second winner was fraudulent. The name was re-auctioned. The third winner was fraudulent (he bid the name up to $4K). When a name can score a triple fraudulent bidder combo streak on their platform, with no legit winner in sight, it’s clear that there is something wrong with how their system works. They are currently holding cannamarket.com in a dropcatch.com holding account, and I wonder whether they will try to re-auction the name a fourth time, or just let it drop since this is obviously a bad look for them when three out of three attempts of auctioning off the name ended up with fraudulent bidding activity (and who is going to be brave enough to bid against all the fraudulent bidders in a fourth auction? This name is apparently a fraud magnet).

Then there was this auction for lumeo.com recently (it was bid up to $14K by a bidder that most likely is fraudulent, and the winner has not yet paid, and the payment deadline passed a few days ago). How long until this name gets re-auctioned due to fraudulent bidding activity?

I often get emails from dropcatch saying "due to complications involving potentially fraudulent activity, the following auctions you had participated in are being restarted". A quick search shows an inbox full of emails notifying me of fraudulent bidding activity and auctions being restarted:

I just received another one today. It contained another SEVEN auction names that closed recently with fraudulent bidding activity:

cybercorp.com - Sold for $1251
sefin.com - Sold for $665
devlog.com - Sold for $343
thermair.com - Sold for $457
simplypretty.com - Sold for $515
finte.com - Sold for $350
kinovo.com - Sold for $330

All these auctions involved fraudulent bidding, and have now been restarted (you can go to dropcatch.com and bid on them right now). A quick visit to the dropcatch.com website shows a other restarted auctions as well, such as for evinite.com (sold for $142) and acercloud.com (sold for $370). Will legit bidders win these restarted auctions this time around?

DropCatch.com is very much like a game of hot potato, where fraudulent bidders bid up auctions and don't pay when they come out winning. There is a significant amount of auctions being restarted due to winners not paying up, when compared with other expired domains auctions platforms. The result is that legit bidders have to pay, literally, for the presence of so many fraudulent bidders on this platform that bid up the prices for legit bidders. Just an advice for everyone to be aware of this issue when participating in auctions at dropcatch.com.

 

[wwwweb]

These names are still held by DropCatch, indicating that they have not yet been paid for (paid for names are moved to the buyer immediately upon payment):
Show attachment 72492 Show attachment 72493 Show attachment 72494 Show attachment 72495 Show attachment 72496 Show attachment 72497 Show attachment 72498
Please let me know your thoughts on this. Have I misinterpreted a legitimate situation or has this bidder been able to continue bidding on domains for more than a month without paying for them?

Great backcheck work!

Another backcheck is typing in the domain, and it goes to the namebright holding whois page which usually indicates it is yet to be paid for.

When it is finally paid, it usually moves to a coming soon construction page.

 

[tonyk2000]

DropCatch logo still says "beta" right one the first page. One would reasonably assume that they may have bugs, which is why some bidders are doing what others are unable to do. I expect that Drop Catch support or owners will post this explanation, should they elect to return to this thread someday. Indeed, what else this can be? Especially after member @Rebies posted "Trust me, we care a lot"?

 

[Arca]

Failure to make a payment for a successful backorder within 96 hours (4 days) of that backordered domain being registered by DropCatch will result in an immediate termination of your DropCatch account and the domain will be treated as an “Unpaid Backorder" per this Agreement.

The terms I quoted above are actually for won backorder that don't go to auction, although the terms for domains won in auctions are pretty much the same:

1. Payment for Winning Auctions A winning bid on a domain auction must be paid by the prevailing customer within 96 hours (4 days) of the end of the auction. All payments must be made in accordance with all payment terms of this Agreement.
2. Unpaid Winning Bids and Re-Auction of Domains In the event a customer fails to pay for a domain they won in auction within 96 hours (4 days) of the end of the auction, the domain will be re-auctioned and the delinquent customer’s DropCatch account will be terminated. The customer will be permanently terminated from DropCatch and not be allowed to use DropCatch or any of its services in the future. A re-auction of a domain will follow the same auction process as set forth under the “Unpaid Backorders” subsection of this agreement. If a domain has been auctioned 2 or more times, and in both cases a non-payment, DropCatch may choose to offer the domain to a second highest bidder or decide not to re-auction the domain name.

XdaydreamX did not pay for weeks before being suspended (this info was provided by Andrew Reberry). Wittynut didn’t pay for months (info also provided by them). And wnnrscrs has not paid for a month. These examples clearly show how they continue to break their own terms and conditions. They do not require certain bidders to pay within 4 days, and they do not terminate the accounts of such bidders until they don't pay for week/months. This is a stark contrast with what is outlined in their terms and conditions.

What are the legalities surrounding DropCatch enforcing a certain set of terms and conditions for regular users, and another different and unspecified/secret set of terms and conditions for the big spenders?

 

[wwwweb]

DropCatch logo still says "beta" right one the first page. One would reasonably assume that they may have bugs, which is why some bidders are doing what others are unable to do. I expect that Drop Catch support or owners will post this explanation, should they elect to return to this thread someday. Indeed, what else this can be? Especially after member @Rebies posted "Trust me, we care a lot"?

They have been operating going on 4 years now, I don't think they can blame this on bugs.

I can see maybe a credit account flowing for active bidders, at the end of the day they still own the domain, and can probably achieve higher sales stats by extending a bit of juice to favorable bidders who have short term cash flow issues. As with any lending option, many times with non liquid investments those cashflow issues extend into the long term, and parties depart on bad terms.

wnnrscrs has been very active bidding, and outbidding, but maybe not so much in paying.

 

[tonyk2000]

credit account

Shouldn't it mean whois change and domain pushed, with the funds "debited" from the credit account / credit line?

 

[wwwweb]

Shouldn't it mean whois change and domain pushed, with the funds "debited" from the credit account / credit line?

No, the whois would just stay frozen in Namebright's holding account until the payment is fulfilled, but obviously they have an exemption mode to allow that party to continue to bid with items still unpaid for in their cart.

Right now as you know if we bid today, we must make full payment of all of today's purchases, if we are to bid tomorrow, or anyday after that, can't even put a backorder in. So there is an exception to the rule override that for some people.

As you know in this business anytime between 11:30am to 1pm PST you can spend thousands of dollars without any real work, just in bidding, and outbidding, by the end of lunch you can be left with a pretty big bill. Day in, Day out, any advantage is a huge advantage in this business. Advantages usually come with favors in return, either way the house always wins.

 

[Jasonn]

these accounts are being unlocked despite non payment. they must talk to support and get this done. i can see giving a few days extra grace for sending wires, etc but what is going on here is far beyond that.

 

[wwwweb]

these accounts are being unlocked despite non payment. they must talk to support and get this done. i can see giving a few days extra grace for sending wires, etc but what is going on here is far beyond that.

I agree that is ok to give grace for wires, but play by the same rules, no other bidding until your cart payment is cleared. Doesn't mean you don't submit wire payment, and get some grace, and then you go on a bidding rampage bidding on more domains, when you haven't paid for the ones you already bought, essentially with monopoly money.

 

[offthehandle]

Now the strange thing about these seemingly unpaid for auctions is that if I don’t pay for a domain, I can’t do anything at all. I can’t bid on domains, I can’t place backorders, nothing. My account is entirely frozen until I pay. That’s how it should be.

FYI, I am under the same conditions also, I need to manually pay any outstanding purchases before bidding further. I have let 2 days lapse a few times and my credit card was manually charged without my authorization, which is fine. Except I got 30 spam emails by the time I later discovered the email and went to put them under privacy. Lol.

Large lines of credit or open purchase orders with net 30 terms is normal when you do volume and develop history in B2B wholesale. In my previous unrelated, non domain ventures I was given $XXX,XXX from my primary supplier based on a verbal handshake, a simple PO I issued for each order and these orders accumlated unpaid until I got paid from my customers. I never was asked to sign a written personal guarantee, since there was mutual trust, my volume purchases and my track record of prompt payment and habits were pristine. Volume purchases come with privileges. Most of my competitors who were low volume were COD only, or 50% prepaid FOB origin, balance due net 30.

 

[Michael]

I knew about it and completely agree with you on it. My main purpose of saying was to implement a way to track such behavior as well if there is some regular activity going between 2 bidders every now and then or even with bidders who win the auction regularly by being 2nd bidder (due to winning bidder being fraudulent) which should flag their system to take notice and look into the issue further manually.

It's difficult to make such changes but there has to be some strict action to be taken since many regular bidders have paid thousands of dollars just due to fake bidders. In the end, it's DropCatch who has made the profit.

Unfortunately it isn't that simple because the scammers cycle through a lot of accounts. Imagine this:

Account A and Account B. Scammer uses them to run up an auction with B winning, but then doesn't pay. It gets rolled back and A wins for peanuts. Now A is flagged to watch for them winning cheap and B is banned.

Create account C. Run it up with A and C, with A winning and not paying and it getting rolled back to C. Now A, which was sort of compromised anyway by being flagged is banned, and C is now flagged.

Create account D... rinse and repeat. See what I mean? No flagged account would ever win again so you wouldn't be able to stop it with your suggestion. The scammer could also just create two new accounts each time instead of one, and never even use a flagged account again.

The only way to have a clean runner-up rule is if you have someone monitoring every single auction looking for these unusual bidding patterns. But that doesn't even really work all that well because of proxies. If Account B puts a proxy of $10k early on and Account A puts a proxy of $9k on a domain that is worth maybe $8k even a human would have a hard time deciding if those bids should be cancelled, the person would have to be an expert appraiser. Many people set proxies early on and it is legitimate.

It would be interesting to know why people are winning expired auctions and then not paying. I suspect sometimes they get carried away with auction fever and then have buyer's remorse. Sometimes they make a typo in their proxy bid and don't realize until the auction is over. Sometimes they bid in a lot of simultaneous auctions expecting to get outbid on most of them, but then win more than they were planning on and can't afford to pay up. But I can't think of any nefarious reason to bid up an expired auction and risk getting banned when the domain will be re-auctioned anyway (and it often ends higher than the first auction). Shilling doesn't make sense for expired auctions, only public ones.

So by using the runner-up rule, you're basically getting rid of stupidity but inviting outright fraud, which in my view makes it the worst possible solution. You have to remember that a re-auction is not a positive outcome for a non-paying bidder, there's no end game in that scenario where the fraudster wins. I don't think people are doing it for personal gain, I think they're just dumb.

Here are some ideas to reduce non-paying bidders that I believe would be more effective:

A combination of runner-up and re-auctions. Use the runner-up rule if the rollback is less than X% of the closing price (something small like 5% - 10%), and re-auction if the rollback is more than that. This makes the runner-up abuse way less profitable to the point that most won't attempt it, but still reduces re-auctions.

Improving account verification to make it difficult to get an account.

Maybe new accounts have a probation period where they can only participate in a limited number of auctions or have a cap on their total outstanding bids until they prove to be serious. If a new account joins just to bid on a specific, expensive name they have to contact support and provide proof of funds (bank statements, etc) or make a good-faith deposit to bypass the restrictions.

When the platform confirms a bid, instead of just showing them the amount and having them click OK (which they might not read carefully), make them type the bid out a second time and compare them (two matching typos in a row are very rare). This will all but eliminate errors.

Show the user a running total of his current outstanding bids. Like "If you aren't outbid, you're currently on the hook for $3,456." Make it really prominent. That would serve as a reminder for people who do a poor job of bidding in multiple, simultaneous auctions how much they could get stuck paying. If they can't afford that amount they might think twice before taking the lead in yet another auction.

Create an AI where you train it on data from bad actors, like how long between creating the account and placing bids, number of simultaneous bids placed each day, number of simultaneous auctions led each day, number of auctions won and paid for, geo location, how often they're logged in, etc. Have it at least flag, but maybe even automatically limit accounts that are acting suspiciously.

 

[Michael]

That's a really good point, I'm also not able to bid or back order until my cart is clear, so obviously some people are getting exceptions.

I could understand why they'd need a work-around for some people. If you have to pay by wire and you're winning a few names a day, you'd get murdered by wire fees unless you consolidated them into weekly or bi-weekly payments.

But they should either be way, way more selective about who they make this exception for, or they should simply require these frequent buyers who have to pay by wire to deposit funds and maintain a balance rather than being given Net 30 terms or whatever they're currently doing.

Granted it isn't ideal for the buyer to lock up funds they haven't spent yet, and it might cost DropCatch some money in the form of lost business. But it is a hot mess when someone wins and doesn't pay, not just for the auction in question but for everything else they bid on and didn't win, so avoiding that should be a higher priority than maximizing convenience for a few ballers.

If they made that change, along with the ones I suggested in my previous post (AI wouldn't really be necessary) I think they could deal with pretty much all the reasons for non-payment they encounter on expired inventory. Public auctions are another story though because there is always incentive to shill.

 

[domeen]

There is a very active bidder with the bid handle “wnnrscrs”. It belongs to a domainer with 8000+ domains. It appears that he has not paid for any won domains over the past month. I was not able to locate anypaid for domains earlier than mid September. All names won since September 29 appear to not have been paid for yet.

Until you pay for a domain at DropCatch WHOIS will say “This domain was caught by DropCatch.com” and “[email protected]”. All names not yet won or paid for have this WHOIS info. That’s what names won by wittynut still say this if you look up WHOIS for those names. And that’s what WHOIS for all names won by “wnnrscrs” over the past month reflect too, a DropCatch holding account. And they forward to a dropcatch page. If he had paid for them, the names would have been promptly moved to his account and WHOIS would have reflected his personal information. Or could there be another reason for this to be happning? Please let me know if there are other valid reasons for DropCatch to be holding your won and paid for domains for more than a month. I have not been able to think of any reason they would do this. I get domains into my namebright account within 60 seconds paying. But that said, I am not completely excluding the possibility that this domainer just likes DropCatch to hold his domains after he has paid for them (though that would be very counterproductive as he can't sell them when he doesn't have them in his account). So based on what I have seen I assume this is another wittynut situation where a bidder has been allowed to continue to bid without paying, but I am also open to the possibility that I am wrong too (and that's why I have left out his name in this post). Please let me know if you find any evidence that indicates that these names are paid for, or if you think these names are not paid for yet.

Now the strange thing about these seemingly unpaid for auctions is that if I don’t pay for a domain, I can’t do anything at all. I can’t bid on domains, I can’t place backorders, nothing. My account is entirely frozen until I pay. That’s how it should be. But based on the many examples that have come to light so far, this restriction does not affect all bidders. And it does not affect “wnnrscrs” as he is still bidding on domains. Shouldn't he have lost bidding functionality on in September if he didn't pay for a domain then? Letting people continue to bid day after day when they owe money for won auctions doesn't make sense. At least freeze their accounts while you wait for the funds to be added.

You can add s/i/s/u/s/t/u/s.com to that list, he outbid me and looks like not paid.

But I use them 1-2 a year only.

 

[wwwweb]

You can add s/i/s/u/s/t/u/s.com to that list, he outbid me and looks like not paid.

But I use them 1-2 a year only.

Your right it ended 10-13-2017, it should have been already reauctioned, and reassigned according to dropcatch TOS. Yet, it is still just hanging around looking to get paid, while this person kept bidding, and out bidding actual paying users after the payment deadline well into the month.

 

[domeen]

Your right it ended 10-13-2017, it should have been already reauctioned, and reassigned according to dropcatch TOS. Yet, it is still just hanging around looking to get paid, while this person kept bidding, and out bidding actual paying users after the payment deadline well into the month.

Yes I am pissed at them (dropcatch) I mean if they have rules, then all should obey them.
and it was last time I ordered something there.

And there was some disscussion before here, if one auction goes up to $13k and next only $2.6k, then If i would be the guy who bid up to $13k and lose auction, I would not bid on this domain either anymore. Even for $100. I mean I have some rules.

 

[wwwweb]

Unfortunately it isn't that simple because the scammers cycle through a lot of accounts. Imagine this:

Account A and Account B. Scammer uses them to run up an auction with B winning, but then doesn't pay. It gets rolled back and A wins for peanuts. Now A is flagged to watch for them winning cheap and B is banned.

Create account C. Run it up with A and C, with A winning and not paying and it getting rolled back to C. Now A, which was sort of compromised anyway by being flagged is banned, and C is now flagged.

Create account D... rinse and repeat. See what I mean? No flagged account would ever win again so you wouldn't be able to stop it with your suggestion. The scammer could also just create two new accounts each time instead of one, and never even use a flagged account again.

The only way to have a clean runner-up rule is if you have someone monitoring every single auction looking for these unusual bidding patterns. But that doesn't even really work all that well because of proxies. If Account B puts a proxy of $10k early on and Account A puts a proxy of $9k on a domain that is worth maybe $8k even a human would have a hard time deciding if those bids should be cancelled, the person would have to be an expert appraiser. Many people set proxies early on and it is legitimate.

It would be interesting to know why people are winning expired auctions and then not paying. I suspect sometimes they get carried away with auction fever and then have buyer's remorse. Sometimes they make a typo in their proxy bid and don't realize until the auction is over. Sometimes they bid in a lot of simultaneous auctions expecting to get outbid on most of them, but then win more than they were planning on and can't afford to pay up. But I can't think of any nefarious reason to bid up an expired auction and risk getting banned when the domain will be re-auctioned anyway (and it often ends higher than the first auction). Shilling doesn't make sense for expired auctions, only public ones.

So by using the runner-up rule, you're basically getting rid of stupidity but inviting outright fraud, which in my view makes it the worst possible solution. You have to remember that a re-auction is not a positive outcome for a non-paying bidder, there's no end game in that scenario where the fraudster wins. I don't think people are doing it for personal gain, I think they're just dumb.

Here are some ideas to reduce non-paying bidders that I believe would be more effective:

A combination of runner-up and re-auctions. Use the runner-up rule if the rollback is less than X% of the closing price (something small like 5% - 10%), and re-auction if the rollback is more than that. This makes the runner-up abuse way less profitable to the point that most won't attempt it, but still reduces re-auctions.

Improving account verification to make it difficult to get an account.

Maybe new accounts have a probation period where they can only participate in a limited number of auctions or have a cap on their total outstanding bids until they prove to be serious. If a new account joins just to bid on a specific, expensive name they have to contact support and provide proof of funds (bank statements, etc) or make a good-faith deposit to bypass the restrictions.

When the platform confirms a bid, instead of just showing them the amount and having them click OK (which they might not read carefully), make them type the bid out a second time and compare them (two matching typos in a row are very rare). This will all but eliminate errors.

Show the user a running total of his current outstanding bids. Like "If you aren't outbid, you're currently on the hook for $3,456." Make it really prominent. That would serve as a reminder for people who do a poor job of bidding in multiple, simultaneous auctions how much they could get stuck paying. If they can't afford that amount they might think twice before taking the lead in yet another auction.

Create an AI where you train it on data from bad actors, like how long between creating the account and placing bids, number of simultaneous bids placed each day, number of simultaneous auctions led each day, number of auctions won and paid for, geo location, how often they're logged in, etc. Have it at least flag, but maybe even automatically limit accounts that are acting suspiciously.

In order to bid over $1,500 at Godaddy they require cc verification, the extent of that verification I do not know, considering most good domains hover around, or over this amount, to keep creating this amount of disposable accounts to sustain such patterns would be daunting with different credit cards, and ip's. It used to be a bigger problem 2+ years ago, they have cleaned it up considerably since then. The lack of usernames on godaddy did not help catch such would be pumpers, but with usernames exposed, such patterns, along with verification would be easy to spot, when pricing is totally out of wack, and you have two named bidders running each other up without due cause time after time.

That is why we are here today, we are noticing abnormal patterns among set usernames, and they are being tagged, and researched, and exposed back for questioning to the auctioneer in question.

 

[wwwweb]

Yes I am pissed at them (dropcatch) I mean if they have rules, then all should obey them.
and it was last time I ordered something there.

And there was some disscussion before here, if one auction goes up to $13k and next only $2.6k, then If i would be the guy who bid up to $13k and lose auction, I would not bid on this domain either anymore. Even for $100. I mean I have some rules.

Yes Lumeo.com was bid up by warlord.com to $14K, who was the second highest bidder, it ended up selling for slightly over $14,xxx, and then was reauctioned when newly created username golumeo did not pay for it.

The second time warlord was active on the platform, but could not be bothered to bid at least $2.6K for it, even though in the first auction they were willing to pay $14K, the second time it sold for $2.6K.

That is a huge payday for dropcatch if a legit user had ended up taking the bait, or run up bids, and the fraudlent user lost their connection, or got distracted in their bid, or whatever.

The only loser is an honest platform user. The shill bidder has no obligation to pay, and the auction operator has the chance a legit bidder gets baited into the winning bid, otherwise they reuaction, and do the dance all over again, which is what they did. Either way the house got paid in the end.

I have already seen many bidders on Dropcatch who used to bid religiously no longer show up to bid. Either they kept paying to much, and are stuck with overpaid non moving inventory, or have lost trust in the system, I have no idea. Until they clean it up, I think most will take a step back, and take their bids with a grain of salt.

 

[Michael]

In order to bid over $1,500 at Godaddy they require cc verification, the extent of that verification I do not know, considering most good domains hover around, or over this amount, to keep creating this amount of disposable accounts to sustain such patterns would be daunting with different credit cards, and ip's. It used to be a bigger problem 2+ years ago, they have cleaned it up considerably since then. The lack of usernames on godaddy did not help catch such would be pumpers, but with usernames exposed, such patterns, along with verification would be easy to spot, when pricing is totally out of wack, and you have two named bidders running each other up without due cause time after time.

That is why we are here today, we are noticing abnormal patterns among set usernames, and they are being tagged, and researched, and exposed back for questioning to the auctioneer in question.

Yea, you guys are doing a great job of uncovering this stuff. Unfortunately I'm not an active bidder at DropCatch and we haven't been recording full bid history along the way so I can't really help much. It isn't like NameJet where the history stays public even if you didn't actually place a bid

Yes Lumeo.com was bid up by warlord.com to $14K, who was the second highest bidder, it ended up selling for slightly over $14,xxx, and then was reauctioned when newly created username golumeo did not pay for it.

The second time warlord was active on the platform, but could not be bothered to bid at least $2.6K for it, even though in the first auction they were willing to pay $14K, the second time it sold for $2.6K.

That is a huge payday for dropcatch if a legit user had ended up taking the bait, or run up bids, and the fraudlent user lost their connection, or got distracted in their bid, or whatever.

The only loser is an honest platform user. The shill bidder has no obligation to pay, and the auction operator has the chance a legit bidder gets baited into the winning bid, otherwise they reuaction, and do the dance all over again, which is what they did. Either way the house got paid in the end.

What is the incentive for either "warlord.com" or "golumeo" to do that on expired inventory though? That's what I'm having a hard time understanding. How do the bad users profit from these shenanigans?

The only reasonable explanation I could come up with for that, when neither of them profit from non-payment, would be that warlord.com was front-running and golumeo was the end user. And then the end user just comes back from a second account and wins the re-auction hoping that the front-runner doesn't screw with them the second time around.

Only other explanation is DropCatch pulling a Halvarez which seems extremely unlikely.

I don't think there's any way to stop front-running though, or even make it more difficult.

 

[AbdulBasit.com]

Unfortunately it isn't that simple because the scammers cycle through a lot of accounts. Imagine this:

Account A and Account B. Scammer uses them to run up an auction with B winning, but then doesn't pay. It gets rolled back and A wins for peanuts. Now A is flagged to watch for them winning cheap and B is banned.

Create account C. Run it up with A and C, with A winning and not paying and it getting rolled back to C. Now A, which was sort of compromised anyway by being flagged is banned, and C is now flagged.

Create account D... rinse and repeat. See what I mean? No flagged account would ever win again so you wouldn't be able to stop it with your suggestion. The scammer could also just create two new accounts each time instead of one, and never even use a flagged account again.

The only way to have a clean runner-up rule is if you have someone monitoring every single auction looking for these unusual bidding patterns. But that doesn't even really work all that well because of proxies. If Account B puts a proxy of $10k early on and Account A puts a proxy of $9k on a domain that is worth maybe $8k even a human would have a hard time deciding if those bids should be cancelled, the person would have to be an expert appraiser. Many people set proxies early on and it is legitimate.

It would be interesting to know why people are winning expired auctions and then not paying. I suspect sometimes they get carried away with auction fever and then have buyer's remorse. Sometimes they make a typo in their proxy bid and don't realize until the auction is over. Sometimes they bid in a lot of simultaneous auctions expecting to get outbid on most of them, but then win more than they were planning on and can't afford to pay up. But I can't think of any nefarious reason to bid up an expired auction and risk getting banned when the domain will be re-auctioned anyway (and it often ends higher than the first auction). Shilling doesn't make sense for expired auctions, only public ones.

So by using the runner-up rule, you're basically getting rid of stupidity but inviting outright fraud, which in my view makes it the worst possible solution. You have to remember that a re-auction is not a positive outcome for a non-paying bidder, there's no end game in that scenario where the fraudster wins. I don't think people are doing it for personal gain, I think they're just dumb.

Here are some ideas to reduce non-paying bidders that I believe would be more effective:

A combination of runner-up and re-auctions. Use the runner-up rule if the rollback is less than X% of the closing price (something small like 5% - 10%), and re-auction if the rollback is more than that. This makes the runner-up abuse way less profitable to the point that most won't attempt it, but still reduces re-auctions.

Improving account verification to make it difficult to get an account.

Maybe new accounts have a probation period where they can only participate in a limited number of auctions or have a cap on their total outstanding bids until they prove to be serious. If a new account joins just to bid on a specific, expensive name they have to contact support and provide proof of funds (bank statements, etc) or make a good-faith deposit to bypass the restrictions.

When the platform confirms a bid, instead of just showing them the amount and having them click OK (which they might not read carefully), make them type the bid out a second time and compare them (two matching typos in a row are very rare). This will all but eliminate errors.

Show the user a running total of his current outstanding bids. Like "If you aren't outbid, you're currently on the hook for $3,456." Make it really prominent. That would serve as a reminder for people who do a poor job of bidding in multiple, simultaneous auctions how much they could get stuck paying. If they can't afford that amount they might think twice before taking the lead in yet another auction.

Create an AI where you train it on data from bad actors, like how long between creating the account and placing bids, number of simultaneous bids placed each day, number of simultaneous auctions led each day, number of auctions won and paid for, geo location, how often they're logged in, etc. Have it at least flag, but maybe even automatically limit accounts that are acting suspiciously.

Very well said Michael! Considering that, I would take back my idea which won't be worthwhile in long run.

I was suppose to say that every account should make advance deposit which will only be refunded once you have cleared your dues AND are no long willing to use DropCatch. I think this is what you proposed in one of your idea. That advance deposit may be something like $500-$1,000 for every account holder willing to bid up to $10,000. Anything over that must pre-deposit with more funds.

To show some seriousness in taking action, this idea must be implemented by DropCatch for existing bidders who has clean track record as well as from the new account holders.

 

[wwwweb]

Very well said Michael! Considering that, I would take back my idea which won't be worthwhile in long run.

I was suppose to say that every account should make advance deposit which will only be refunded once you have cleared your dues AND are no long willing to use DropCatch. I think this is what you proposed in one of your idea. That advance deposit may be something like $500-$1,000 for every account holder willing to bid up to $10,000. Anything over that must pre-deposit with more funds.

To show some seriousness in taking action, this idea must be implemented by DropCatch for existing bidders who has clean track record as well as from the new account holders.

Oh Dropcatch would love that $250K of interest free money to play with. It is chump change based on how bidding goes there for most, but impractical, real customers need not put deposits.

There has to be a top down approach, accounts which are not vetted, or have no history should go thru id verification to bid anything over $500. That is pretty much the only way. I would say to Dropcatch existing accounts in good standing, let them be, but new accounts that would be formed for front running, or for fraudlent purposes make them ID verify going forward, even a credit card verification, with matching address utility bill would help somewhat.

I have no idea what their verification policy is now, but clearly it is not working. Unless it is credit card verification which is being gamed with prepaid visa gift cards.

 

[AbdulBasit.com]

Oh Dropcatch would love that $250K of interest free money to play with. It is chump change based on how bidding goes there for most, but impractical, real customers need not put deposits.

There has to be a top down approach, accounts which are not vetted, or have no history should go thru id verification to bid anything over $500. That is pretty much the only way. I would say to Dropcatch existing accounts in good standing, let them be, but new accounts that would be formed for front running, or for fraudlent purposes make them ID verify going forward, even a credit card verification, with matching address utility bill would help somewhat.

I have no idea what their verification policy is now, but clearly it is not working. Unless it is credit card verification which is being gamed with prepaid visa gift cards.

There is no use of credit card verification, ID verification and/or with matching utility bill verification as many can game their system with ease.

Instead of thinking what DropCatch would hold (250K or whatever amount), it's better every serious bidder remains on the safe side.

I'm not blaming any bidder but any existing genuine bidder can become "wittynut" for any reason so the advance deposit for every account holder be in place. And amount level should go up like under for any 10K bids, one should deposit $500-$1,000 and from 10K-50K, a deposit of $2,000 be must and so on...

 

[tonyk2000]

Non-refundable security deposit? Sounds good, but too dangerous from legal point of view. They may already be "questioned" for running auctions without proper licensing, and this is more - holding 3rd party money not being licensed as a deposit-taking institution?

A different thing would be pre-funding account balance and bidding with pre-paid funds only, this may be OK, but non-refundable security deposit solution (not the same as pre-funded bidding) is simply too dangerous.

Strange that Drop Catch does not understand that one and only thing that would save them from frontrunners (who are forming 90% of questionable bids as they have no intention to pay unless an enduser victiim is found and pays them within 4-5 days dropcatch waiting period) would be going to closed model, in which case there would be no open-for-anyone-to-join bidding list published.

Anything else they may be trying to implement would not solve the problem is any aspect, as their system is vulnerable by design. Besides that, with closed auctions many legitimate bidders will return so they will start making more $$$ and the end of the day. I would not be surprised if their competitors are now celebrating seeing how dropcatch continues to shoot themselves in the foot by saying "we will not change to closed model" in one of earlier pages. Money in the "purse" of legitimate bidders is always limited (only U.S. Federal Reserve may bid with unlimited $$$, and also frontrunners may and will bid any amounts just to secure an opportunity to pay), and so for legitimate domainers it becomes more and more logical to start spending their money elsewhere, as already noted a few posts before:

I have already seen many bidders on Dropcatch who used to bid religiously no longer show up to bid.

 

[wwwweb]

Two of the most active winners at Dropcatch is leader, who we all know from being outbid at namejet as EASILY out of HK, and chwmwwwjk or whatever that means from South Korea, take these two guys off the platform, and you are less likely to pay end user pricing, droocatches saving grace.

Tony is right nobody else uses a prefunded model, the profits are to good for them in the open model, I can't see them going to closed.

I think they are just gonna do this and Abracadabra we are going to monitor new accounts more aggressively, and probably put out account credits for overbids my suspended or non authorized users.

 

[Arca]

What is the incentive for either "warlord.com" or "golumeo" to do that on expired inventory though? That's what I'm having a hard time understanding. How do the bad users profit from these shenanigans?

The only reasonable explanation I could come up with for that, when neither of them profit from non-payment, would be that warlord.com was front-running and golumeo was the end user. And then the end user just comes back from a second account and wins the re-auction hoping that the front-runner doesn't screw with them the second time around.

These are misconceptions about what took place in this auction. I'll try to clarify about these bidders.

Firstly, Warlord is a Portugese domain investor. So far he has paid for other won auctions, though his extremely volatile bidding patterns are quite noticeable if you bid on DropCatch. Someone said he loved the domain and overbid. That does not explain why he didn't "love" it anymore two weeks later. Nobody but him knows his exact motivation for bidding up to $14K. As he went from making a $14K bid to not bidding above $59, it possible that he was trying some kind of front running scheme too.

Secondly, Golumeo is confirmed a domainer and frontrunner, not an end-user. Golumeo “impersonated” g o l u m e o (.) com to scare off domain investors (the logic behind that: if you outbid this end-user, you can’t sell it to them for a profit anyway - but the participation of an unpredictable bidder like warlord meant that strategy had no effect). The end-user company of the same name have confirmed that this was not them, but they were contacted by someone trying to sell them the name for $32,000. So someone attempted a $14K to $32K flip. No end-users took the bait at $32K and golumeo defaulted on the payment.

Thirdly, the second re-auction was won by a Chinese domain investor (kamisama), and second highest bidder was also a domain investor (greenmountain). These two auctions have been game between domain investors and frontrunners seeking to make a profit. End-users have been entirely absent from both the original auction and the re-auction.

 

[AbdulBasit.com]

Non-refundable security deposit? Sounds good, but too dangerous from legal point of view. They may already be "questioned" for running auctions without proper licensing, and this is more - holding 3rd party money not being licensed as a deposit-taking institution?

A different thing would be pre-funding account balance and bidding with pre-paid funds only, this may be OK, but non-refundable security deposit solution (not the same as pre-funded bidding) is simply too dangerous.

Strange that Drop Catch does not understand that one and only thing that would save them from frontrunners (who are forming 90% of questionable bids as they have no intention to pay unless an enduser victiim is found and pays them within 4-5 days dropcatch waiting period) would be going to closed model, in which case there would be no open-for-anyone-to-join bidding list published.

Anything else they may be trying to implement would not solve the problem is any aspect, as their system is vulnerable by design. Besides that, with closed auctions many legitimate bidders will return so they will start making more $$$ and the end of the day. I would not be surprised if their competitors are now celebrating seeing how dropcatch continues to shoot themselves in the foot by saying "we will not change to closed model" in one of earlier pages. Money in the "purse" of legitimate bidders is always limited (only U.S. Federal Reserve may bid with unlimited $$$, and also frontrunners may and will bid any amounts just to secure an opportunity to pay), and so for legitimate domainers it becomes more and more logical to start spending their money elsewhere, as already noted a few posts before:

Non-refundable deposits for those who ends up not paying for auction for any reason.

Refundable deposits for those who keeps buying domains using their service and whenever they plan to stop using them forever, get their deposit back by clearing up the remaining dues, if there are any.

 

[Arca]

I don't think there's any way to stop front-running though, or even make it more difficult.

Closed auctions, as used by NameJet/SnapNames, would make it more difficult and would also lower fraudulent bidding in general. Most frontrunners don't seem to do any research and backorder domains themselves. They just browser whatever dropcatch sends to open auctions and try to strike deals with an end-user while the auctions are going on. If these names went to private auctions many of these frontrunners would be oblivious to these domains even having dropped recently. Moreover, many of the super privileged and deep-pocketed buyers at DropCatch do not seem to scan lists and backorder domains (at least they only appear in public auctions, not private ones). They just enter public auctions and bid on whatever is available there. The open auction system is also what enables such bidders to do particular damage if they go rogue and bid in lots of auctions over a longer period and then eventually don't pay for those auctions after several weeks/months, in what will then retrospectively be deemed fraudulent bidding activity. This open system increases the risk and prevalence of frontrunners and fraudulent bidding activity in a way that closed auctions do not.