GoDaddy allows executives to bid against own customers in auctions?

As posted by member fyodor on the NoDaddy forum -

"When a GoDaddy customer forgets or otherwise fails to renew a domain, GoDaddy sells it off to the highest bidder through their TDNAM subsidiary. Some registrars--even Network Solutions--give the domain owner a percentage of the proceeds of such auctions. But GoDaddy keeps all the spoils to themselves. Anyway, it was recently discovered that the Vice President of TDNAM has been bidding on (and sometimes winning) TDNAM's own auctions. This drives up the prices for normal customers and also leads to conflict of interest issues since normal bidders need to trust TDNAM to keep various information secret, such as their proxy bids, bidding history, the domains on their watch list. Also, GoDaddy doesn't tell you when your bid price was inflated due to TDNAM executives bidding against you. They are one of the few auction services which don't even give you the nicknames of competing bidders.

DomainNameWire contacted other domain auction services, and none allow unrestricted employee bidding on their own auctions like GoDaddy does. Enom (a patner in NameJet) notes that "We definitely do NOT let employees compete in auctions. Even if controlled, that practice has bad news written all over it." Yet GoDaddy seems to think it is fine for executives to inflate their auction prices by bidding against customers. They responded to DomainNameWire that they allow this. There is a big risk that these employees have access to private information of the normal bidders, that they get special discounts, or that they may sometimes shill bid to increase prices without trying to actually win."

The story has since been picked up by Digg and Slashdot.