TicketNetwork sues NYAG to defend speculative reselling

US secondary ticketing platform TicketNetwork is gearing up for a court battle with New York’s new attorney-general (NYAG) after she announced plans to sue for millions of dollars to prevent the site listing tickets sellers do not yet own.

The New York state assembly in June passed a bill aiming to protect consumers from “exploitative ticket reselling practices”, including tackling the practice of speculative ticket resale. The new legislation would also force resellers to disclose whether or not they have the ticket at the time of purchase and refund customers if they cannot deliver.

NYAG Barbara Underwood (pictured) took over from former Eric Schneiderman in May, and has continued her predecessor’s crusade to increase fairness and transparency in New York’s ticketing market. The attorney-general’s office has been investigating the sector since January 2016, when Schneiderman presented a report, Why Can’t New Yorkers Get Tickets?, that found ticketing is a “fixed game” in the US’s fourth most populous state.

TicketNetwork, a major resale marketplace, says it has been threatened with a multimillion-dollar fine to avoid facing a civil action from Underwood’s office over speculative resale. “According to the NYAG’s assertions, any time a seller offers a ticket for sale that the seller does not yet own, but will procure after an order is placed, the seller has automatically committed a fraudulent and unlawful act,” according to a statement from the company, “and TicketNetwork is allegedly responsible for this purportedly illegal conduct because it provides a marketplace through which such ticket offers are made.”

This, says TicketNetwork, is based on an “incorrect interpretation of state and federal [US] law”, with the company citing the Communications Decency Act (CDA) of 1996 – which “directs that providers of online interactive services are not responsible for the conduct of the independent sellers and buyers that use their web-based marketplaces” – in its defence.

“We have been forced to seek court protection in response to the AG’s baseless claims and threats”

It claims the bill signed into law in June allows resellers to list tickets before they have purchased them, provided that they disclose certain information about the tickets.

Alongside affiliated outfit Ticket Galaxy, the company has, therefore, filed a suit of its own in the New York supreme court, with the hope a judge will affirm its position “that it operates in full compliance with all applicable regulations and that the NYAG has no basis to allege that the company’s practices violate any state or federal law”.

TicketNetwork’s chief operating officer, Mike Honeyman, says: “We have been forced to seek court protection in response to the New York attorney-general’s baseless claims and threats against TicketNetwork. The NYAG knows full well that we have immunity under the Communications Decency Act of 1996 and that New York state laws and administrative guidance permit these types of sales.

“Despite that, the NYAG appears intent to press on with this course of action. Online commerce would be severely negatively impacted, and consumers would see a decrease in competition and an increase in costs if the protections afforded to online marketplaces such as Amazon, eBay and innumerable others were selectively ignored.

“We are asking the court to reaffirm that online marketplaces are protected under federal law, as it is apparent that the NYAG’s office needs a reminder of this longstanding principle. In addition, given the recently enacted New York law, we are confident the curt will determine that we are in full compliance with the law.”

Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.