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11|06|2009 12:01 pm EDT

Users Accepting Snapnames Rebate Sign Away Right to Further Claims

by Frank Michlick in Categories: Up to the Minute

In the recently admitted “halvarez” scandal where an employee placed bids in Snapnames domain auctions against company policy, the company has started to email details on the offered rebates – you can find a de-personalized copy of the email after the jump. By accepting the rebate and signing the release you are also signing your right away for any further claims against SnapNames., Inc.
1600 SW 4th Ave., Suite 400
Portland, Oregon 97201

November 6, 2009

Re: Rebate Offer

Dear Customer:

On November 4, 2009,, Inc. (“SnapNames”) notified customers about an unfortunate incident involving an employee bidding under a false name in certain SnapNames auctions. As we said previously, this was a clear violation of our internal policy and we regret that it occurred. In order to avoid any appearance that SnapNames benefited from this unauthorized conduct and in recognition of the importance of fair auctions, SnapNames is offering a rebate to any customer that won an auction in which this employee’s bidding activity resulted in a higher price paid by the customer. This letter provides more details regarding this rebate offer.

The account in question was named “halvarez.” Our records indicate that you won one or more auctions involving domain names in which halvarez also placed a bid. The attached Schedule I (link below) includes: (i) a list of each domain for which you were the winning bidder in a SnapNames auction in which halvarez placed a bid that affected the amount of the winning bid in the auction, (ii) the date on which the auctions for each domain closed, (iii) the winning bid price paid for such domains, (iv) the rebate amount for such domains, (v) the aggregate interest amount and (vi) the aggregate rebate amount.

Although the employee that placed bids under the name halvarez appeared to have submitted genuine bids in many auctions in which another person won, SnapNames is offering a rebate in each and every instance where this employee’s bidding had an impact on the winning bid. SnapNames is doing so to avoid any appearance of a conflict of interest on the part of the company.

How Affected Auctions Were Reviewed

To determine the rebate offer amount, SnapNames hired FTI Consulting, an independent, international forensic accounting firm, to perform a thorough review of these auctions and calculate the rebate. FTI Consulting reviewed data regarding all of the bidders in an affected auction, including the bids each bidder placed in the auction and the maximum bids the bidders indicated they were willing to place in the auction, and determined from this data what the winning bid would have been had halvarez never placed a bid in the auction. This amount was then subtracted from the actual price paid for the domain name to determine the amount of the rebate for that auction.

Calculation of Rebate Offer Amounts

In situations where a customer competed in the auction against only halvarez, the rebate offered is the difference between the winning bid and the opening bid for the auction, plus interest. This calculation assumes that were it not for the bidding by halvarez, the client would have won the name with the opening bid. In situations where there were other bidders in addition to the winner and halvarez, FTI Consulting reviewed the bidding history for each auction, as well as any indications by other bidders regarding the maximum bid they were willing to submit in the auction, to determine what the winning price would have been had halvarez not participated in the auction. For example, if the winner paid $100 for the domain, halvarez had bid $90, a third person’s maximum bid was $80, and the minimum bid increment was $5, then FTI determined that the winner would have won the auction at $85 were it not for the bidding by halvarez. Thus, the rebate offered for this auction would be $15, i.e., $100 minus $85, plus interest.

The Rebate Offer

In your case, SnapNames has concluded that had halvarez not placed a bid on any of the auctions you won, you may have paid less for the domain names you purchased at auction. Therefore, SnapNames is offering you a rebate for this amount plus interest, calculated at the rate of 5.22%, compounded annually, which is the highest value of the 1 month constant maturity treasury rate during the applicable period. This rate is established by federal law.

The rebate is available, at your option, in cash or as a credit to your SnapNames account. (Please note however that credit to your SnapNames account will be available only if the rebate amount, including interest, is $59 or higher. If the amount is less than $59, your rebate will be offered in cash.) Although we don’t currently anticipate doing so, we may impose other restrictions on the issuance of account credits, to satisfy legal or accounting requirements.

This offer is dependent upon your executing and returning to Rust Consulting, Inc., a third party administrator that is assisting with the administration of this rebate offer, the accompanying Rebate Offer Acceptance Agreement (link below) which, among other things, waives any claims you may have against SnapNames and its affiliates relating to this matter. This offer is open for twelve months from today’s date. If the offer is not accepted within this time frame, then the rebate will no longer be available.

If you have questions or concerns regarding the rebate calculation or other aspects of this offer, please contact Rust Consulting by telephone at 1-888-413-5338 or by e-mail at Please be prepared to provide detailed information and data regarding your bidding and purchase activity to the extent that it differs from the information we have provided to you.

Under certain circumstances we may be required to report the interest paid to you to the U.S. Internal Revenue Service (“IRS”). To permit us to satisfy any reporting obligations, your receipt of payment or credit from SnapNames pursuant to this offer may be conditioned on your providing us with a properly completed and executed IRS Form W-9 (or, for non-U.S. persons, an IRS Form W?8BEN or other appropriate version of Form W-8), or such other materials that may be required to enable us to comply with applicable tax laws. If so, we will provide you with further information. You are urged to consult your tax advisor regarding the U.S. federal income and other tax consequences to you that may result from this offer.

Processing Your Rebate Offer

In order to process your rebate, please execute and return the Rebate Offer Acceptance Agreement and send it to the following:

SnapNames Rebate Administrator
P.O. Box 98
Minneapolis, MN 55440-0098

If you so elect, you may contact Rust Consulting to print and mail you a copy of these forms, along with a self-addressed stamped envelope. Rust Consulting can be reached by telephone at 1-888-413-5338 or by e-mail at Please provide your current mailing address with your request. Upon receipt of your Rebate Offer Acceptance Agreement and after verification of your eligibility, Rust Consulting will provide your rebate check (or confirm application of account credit) by mail.

Again, SnapNames regrets that its policies were not followed and that any of its customers may have been inconvenienced by this matter. SnapNames thanks you once again for your continued business.


Jeff Kupietzky Craig Snyder
President and CEO General Manager,

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