Snapnames Uncovers Auction Fraud, Fires Exec
November 5, 2009
SnapNames, and Oversee company, has fired a company executive for allegedly bidding on SnapNames auctioned domain names over the past several years, in violation of company policy. The company vows to reimbuse affected customers who may have paid more for domains purchased in SnapNames auctions once it completes a third-party audit.
SnapNames reports that about 5% of auctions were affected, for a dollar amount that represents approximately 1% of the company’s revenues.
Domain Name News and other various forums and blogs have speculated that the executive in question used the account name “halvarez” and is Nelson Brady, ex-VP of Engineering at SnapNames.
In fact, in forum posts dating back to at least 2007, some users speculated that user “halverez” worked at SnapNames. In a post from December, 2007, DNforum user, “Seraphin” speculated that “halverez” worked for SnapNames, writing:
I believe halvarez is SnapNames, regardless of the fact that he/she bids on domains, or even wins auctions. A year ago, I could spot which domains in my drop list would not have competitive bidders, I would obviously delete these names from my account, and pick them up at reg fee once they dropped. However, for a solid 8 months now I cannot do this, as halvarez bids on every single domain that I enter into my SnapNames drop list. I could enter the shittiest name possible up for drops, and there is a 100% chance halvarez will be there. The kicker is however, if I don’t enter the name into my SnapNames auction list, you guessed it, it drops with no bids and I pick it up at reg fee. Anyone from SnapNames care to explain this phenomenon?
Who can I report this to, the FTC? Does anyone know where I can file an official complaint about this situation? Would anyone be willing to launch a collective petition, a sort of “call to action” that we can submit to relevant authorities for further investigation?
Domainers have long speculated whether domain name auctions are legitimately run, and now some facts come out that show at least some were not.
———- Advertisement ———-
How to Account for Domains Sales Profits on Your Tax Returns?
Wondering how to treat domain profits on your tax returns? If you count the profits as capital gains, you may only pay 15% tax on those profits. Make sure you don’t pay more taxes than you owe on domain name sales.
Sandra Brooks, author of the Domain Tax Guide specializes in tax planning for domainers. In this invaluable book, Brooks outlines all the details you’ll need for effective tax planning for entrepreneurs who buy and sell domain names.
Learn More About the Domain Name Tax Guide »
———————————–
Below is the letter SnapNames sent to its customers:
———
Dear SnapNames customer:
I’m contacting you today to inform you of an unfortunate incident at SnapNames, and to let you know what the company is doing to address it.
Recently, SnapNames 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. This is a clear violation of our internal policy and was not approved by the company. We deeply regret that this conduct has impacted our customers.
Extent of impactThis conduct affected a small percentage of SnapNames auctions:
- Bidding affected approximately five percent of total SnapNames auctions since 2005, most of which occurred between 2005 and 2007.
- The incremental revenue from the bidding represented approximately one percent of SnapNames’ auction revenue since 2005.
No matter the level of impact, SnapNames takes this matter extremely seriously. When the matter was discovered, the company immediately closed the account in question and began a thorough investigation. The employee has also been dismissed from the company.
SnapNames further discovered that, on certain recent and limited occasions, when the employee won an auction, the employee secretly arranged to refund from SnapNames to the fictitious account a portion of the winning bid amount.
Remedy to affected customers
Though on some occasions the employee won the auction, in many instances the bidding caused the ultimate auction winner to pay more for a name than had the employee not participated in the auction.SnapNames neither condones this conduct nor wants to be perceived as benefiting from the conduct. Accordingly, we have decided that regardless of the circumstance, in every auction where the employee’s fictitious account submitted a bid which resulted in a higher price being paid by the winning bidder, SnapNames will offer a rebate, with 5.22% interest (the highest applicable federal rate during the affected time period), to affected customers for the difference between the prices they actually paid and the prices they would have paid, had the employee not bid in the auctions. The rebate will be available in cash or in credit on the SnapNames platform, at your discretion.
SnapNames has moved quickly to address this situation. The company has retained Rust Consulting, an independent third party, who will administer the rebate offer. Within the next week, Rust Consulting will contact affected customers to provide details regarding the offer.
Your business and ongoing relationship are important to us and we can assure you that we have taken all necessary steps to ensure the integrity of the platform and reinforced controls and procedures to avoid any possibility of further breach. These include:
- Enhanced monitoring of bidding activity for suspect behavior
- Additional controls over financial transactions
- Specific domain name registration policies for employees
In the meantime, if you have any questions, you may consult the FAQs here, or contact the SnapNames support team:
By e-mail: support@snapnames.com
Phone: +1 (866) 690-6279 (toll-free in the U.S.)
+1 (503) 241-8547 (outside the U.S.)SnapNames, and all in the Oversee family of companies, are deeply disappointed with this incident. Since its founding in 2000, SnapNames has been committed to the principles of fairness and trust; the company wants to assure customers—through both words and actions—that it remains committed to those principles.
Thank you again for your business, and for your ongoing trust in SnapNames.
Sincerely,
Jeff Kupietzky
President and CEO
SnapNames.comCraig Snyder
General Manager
SnapNames
Comments
Advertisement