GoDaddy BackOrder Blues18 September 2009
Some years ago, Go Daddy added a back-order service whereby a domain already registered by another party would be monitored and, should its registeration lapse, the domain would be registered in the name of the purchaser of the service.
Some time after that, Go Daddy added an auction service. And, when registration lapses for which Go Daddy is the registrar, then duiring the grace period (42 days in the case of Go Daddy) Go Daddy itself puts the domain up for auction; the auction ends well before the grace period, and the auction results are cancelled if the prior registrant renews before the end of the grace period.
A registrant seeking to have a domain appraised might simply let the registration lapse, watch the auction, and then register before the end of the grace period. A late registration requires a higher fee, but that difference could be viewed as the cost of appraisal.
Now. here's where it gets ugly. Go Daddy holds such auctions even if there is a prior back-order. They hold the auctions even if the domain had a different registrar when the back-order was placed, but then switched to Go Daddy. They hold the auctions even if the back-order was placed before they had an auction service. If the domain should be bid to anything above an opening bid of US$10, the purchaser of the back-order must either pay more or let the domain go to some other party.
A Go Daddy back-order on a domain is worse than useless to its buyer if the domain may be expected to be registered with Go Daddy at the time whenever registration lapses. If the domain is sufficiently attractive that a back-order would be useful without an auction, then there will be competitive bidding in an auction.
Now, I'm sure that Go Daddy sent a notice that the old back-orders were going to be subjected to the new protocol, and that refunds were offered. But few if any customers would have understood the implications of a change, otherwise there would have been a lawsuit that Go Daddy would have lost, as simple refunds wouldn't have covered the economic loss avoidably being placed on these customers.