Godaddy has a special reputation on HN and among the tech community in general. I can narrate a few examples that I'm personally aware of, but that's besides the point. But to say that there are not many scams in the DNS business is a bit of stretch. There have been allegations of conflict of interests even in case of ICANN.

The core issue is that DNS is a money factory that exists because of their first mover advantage and incumbency factor. There is no other reason why someone else couldn't have been in charge. It's like those academic publishers in the age of the internet (though they had legitimate reasons to exist before the internet). Their justification for existence is that they already exist. Such systems are ripe for exploitation and corruption. And there is no reason someone won't do it when they get a chance.

A naming system is necessary and a centralized naming system is certainly costly to maintain. But, we could have sacrificed the centralized control in favor of low cost of operation and virtually free identities. (The sacrifice is due to Zooko's triangle). The identities won't be that easy to remember - but we already have a similar system where that issue is solved. We have nearly random phone numbers that we map to pet names in our contacts list. It would have avoided another avenue of unnecessary economic exploitation on the internet.

Yeah based on the downvotes I got I'm understanding that this is an unpopular opinion. Truth is, I've been in the web hosting business for over 25 years and the number of actual domain name related scams that I've personally seen are very very low. Perhaps I just don't eat sleep and breath DNS enough.

And I mean sure, godaddy sucks. I get it. I don't use them. But a customer of mine has all his domains there, and it just works. That doesn't make them better in my eyes. I work with people who helped build godaddy- and yes, we giggle and rudely point at them for what they've become. But a scam? That's a stretch to me. and what the OP posted about was not a scam.

What OP described here does sound like it's a domain privacy measure, rather than a scam. But Godaddy is known to register domains that their customers search for, and then offer it on auction - at least in the past. They also demonstrated some fine-print policy by which they hold hosted data hostage to force a steeper renewal fee. (Not me. I wouldn't host anything other than DNS records with my registrar - even though I trust mine much more than Godaddy). I don't know why they won't count as scams. But they are red flags enough for me to stay well away.