You are probably connecting fine but don't have sufficient privileges to run show dbs.

You don't need to run the db.auth if you pass the auth in the command line:

mongo somewhere.mongolayer.com:10011/my_database -u username -p password

Once you connect are you able to see collections?

> show collections

If so all is well and you just don't have admin privileges to the database and can't run the show dbs