Ticketmaster Charged with Scalping Scam

November 7, 2018

Ticketmaster Entertainment, Inc. is a company that has been steeped in controversy and plagued by lawsuits regarding service fees and antitrust claims.  As the primary ticketing agent used by most venues in North America for concerts, sporting matches, and other live events, the public eye is regularly trained on it.  Alternate purchasing options are scarce, particularly for larger events, which means one’s options are limited to either Ticketmaster or ticket scalpers.  A recently published investigative report by CBC News and the Toronto Star has shown that these two ticket options are more intricately connected than the public was aware and has led to a new round of lawsuits against Ticketmaster.

In a joint effort by CBC News and the Toronto Star, several in-depth investigations were conducted on Ticketmaster.  The first, and largest, saw two investigative journalists going undercover as small-scale, third-party ticket scalpers at Ticket Summit 2018 in Las Vegas.  While there, the journalists were approached by a sales team from Ticketmaster pitching TradeDesk, its proprietary, professional reseller program.  TradeDesk enables bulk ticket buyers to quickly resell tickets through Ticketmaster-owned sites, with Ticketmaster earning a portion of the resale for facilitating the transaction.

According to Ticketmaster’s terms of use, customers are prohibited from purchasing “a number of tickets for an event that exceeds the stated limit for that event … if we identify breaches of these limits … we reserve the right to cancel any such orders.”  The terms of use also prohibit the “use of automated means to purchase tickets”.  On Ticketmaster’s own site, it refers to professional scalpers as “unfair competition.”   According to the sales team for TradeDesk, however, these accounts receive zero monitoring despite violating the express terms of use.

The second investigation, run concurrently with the first, performed an analysis of the box office sales for a Bruno Mars show.  The analysis revealed several tricks being used to manipulate the seat prices and artificially create the appearance of scarcity.  One technique, referred to as “hold-backs,” has pairs of seats be held back from sale initially and then slowly released over time in order to appear as though there are only limited seats remaining.  In addition, large blocks of seats would sell off at a time, then reappear moments later for resale as part of Ticketmaster’s “verified resale” program.  Touted as providing fan-to-fan resales, this program operates in conjunction with TradeDesk to enable scalpers to upload their purchases and quickly resell them.  Doing this through Ticketmaster’s site allows the scalpers to receive a discount on fees, and enables Ticketmaster to collect a second fee for once-sold tickets.

Based in large part on this reporting, several class action lawsuits were initiated against Ticketmaster and its parent corporation, Live Nation Entertainment Inc.  One was filed on September 28, 2018, in the Northern District of California, alleging that Ticketmaster violated “established public policies supporting honesty and fair dealing in consumer transactions” for its role in organizing and facilitating a mass secondary resale operation.  A second suit has been filed in Canada based upon the same circumstances.

This all comes on the heels of a settlement that Ticketmaster reached with the developers of different ticket-buying software.  This software enabled third-party resellers to quickly purchase large numbers of tickets from Ticketmaster, then resell them on different sites.  Ticketmaster filed suit against Prestige Entertainment West, Inc. and others, alleging that these developers had created software to purposely breach their terms of use.  As part of the settlement, the developers were enjoined from further supporting this software.

Ticketmaster has yet to substantively respond to either the investigative reports or the lawsuits.

Image Source: Alexandre Meneghini/REUTERS

Not a Westlaw subscriber? Sign-up for a free trial today.