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SnapNames has recently discovered that it was defrauded by one of its own employees. SnapNames is a company which organises auctions for domain names. One of their employees has set up an account in the SnapNames system under a false name and under this name bid in auctions which were provided by SnapNames.

The bids of this employee approximately affected 5% of the auctions organized SnapNames. Moreover the company also discovered that when the employee won an auction, he/she secretly arranged to refund from SnapNames to the fictitious account a portion of the winning bid amount.

Although the employee has not often won an auction, there are many other auctions where the price of the offered domain name was influenced by his / her bids. This means that the actual winner of the auction had to pay a higher price for the offered domain name than had the employee not participated in the auction.

When SnapNames discovered what their employee was doing, he/she was immediately dismissed. Moreover, the company also decided to compensate all the customers who had to pay more for their domain name due to the bids of the employee.

SnapNames will check which amount the customer would have paid if their employee wouldn’t have bid and refund the the difference along with an interest rate of 5.22%  to the customer in question. To settle these repayments, SnapNames has retained Rust Consulting, an independent third party. The company also said it will make extra efforts to avoid such practices in the future. For instance: suspicious behaviour during auctions will be better monitored, all their employees have signed a new internal policy regarding domain name registrations and financial transactions will be better controlled.

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