SnapNames faces class action lawsuit following false bidding

SnapNames is facing a class action lawsuit, following the recent discovery that an executive employed by the company had set up an account on the SnapNames system under a false name and, under this name, bid in SnapNames auctions. They have found the former executive bid on around five per cent of auctions.The class action lawsuit was filed this week in Miami-Dade County Circuit Court on behalf of lead Plaintiff Carlos A. Cueto and others who participated in online auctions for domain names. In the lawsuit, Mr. Cueto alleges that an executive of the company conducting the auctions acted as a shill bidder to manipulate bids. The domain names were auctioned online by Oversee.Net, Inc. subsidiary SnapNames.Com, Inc.The SnapNames employee has been identified as “Halvarez” going by their bidding name, or Nelson Brady, by Domain Name News. He was one of the earliest employees of SnapNames.The conduct by Brady affected a small percentage of SnapNames auctions, estimated by the company to be approximately five percent of total SnapNames auctions since 2005, most of which occurred between 2005 and 2007, before SnapNames was acquired by Oversee. To a much lesser extent, auctions in 2008 and 2009 were also impacted.According to the class action complaint, a former vice-president of SnapNames.Com secretly bid on tens of thousands of domain name auctions over the past four years, driving up costs for other bidders. It is alleged that the company executive set up an account on the Defendants’ system under a false name and, under the name, bid in online domain auctions run by SnapNames.Com, Inc. and Oversee.Net. As a result of the internal employee bidding, the suit alleges the prices to purchase a domain name were falsely inflated, leading to higher costs to buyers and greater profit for the defendants.The class action lawsuit, brought by the Cueto Law Group law firm, is the first nationwide to allege that a domain name provider used a shill bidder to manipulate auctions. “The domain name industry is the wild west of intellectual property because it remains unregulated. The online community has been up in arms over what they feel has been an opaque system that just begs for transparency. It is impossible to know whether you are bidding against someone that isn’t working or affiliated with the company conducting the auction,” said attorney Santiago A. Cueto.”Domain names are the last frontier for the average person to stake their claim on some very valuable property. The Defendants’ conduct has made it harder for people to do so and we intend to put a stop to this practice, which we perceive as being a major concern in the industry,” added attorney Santiago A. Cueto.

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