US FTC urged to ban ticket drip pricing
A group of New York academics have urged the US consumer watchdog, the Federal Trade Commission (FTC), to ban so-called ‘drip pricing’, where additional charges are added at the end of the booking process for tickets and reservations.
In a petition to the FTC, Brian Canfield, Jack Lienke, Matthew Peterson and Max Sarinsky of the Institute for Policy Integrity at New York University School of Law, argue that drip pricing, which is “pervasive for concerts and other events that impose ticketing charges, as well as hotel and vacation rentals that charge cleaning or resort fees”, serves no legitimate business purpose and harms consumers, and so should be outlawed by the FTC.
Drip pricing is already banned in much of the world, with local FTC equivalents in the UK, the Netherlands, Canada, Russia, France and elsewhere having taken action to ensure the price consumers will pay for a concert ticket is displayed upfront.
In an article for the New York Times, Sarinsky (pictured), a senior attorney at the institute, says drip pricing is also unfair to businesses that don’t institute the practice. “Unless all sellers are required to disclose their full prices upfront, companies that opt for transparency risk losing market share to those that practice deception,” he writes.
“A ban on hidden fees and drip pricing would represent a huge win for consumers and improve the functioning of markets where the practice has taken root”
According to Ticket News, most online ticket sellers (both primary ticket agencies and secondary marketplaces) already offer ‘all-in’ pricing, with AXS and Vivid Seats the only platforms while hide extra charges “until [the] last step”.
As Sarinsky notes, drip pricing is already illegal in the airline industry in the US, while San Francisco and Washington have sued hospitality companies for ‘deceptively’ advertising travel packages and holiday rooms at an unattainable price.
“Under our proposal, all sellers would be required to disclose the full price of a product or service upfront, with any mandatory surcharges included as part of that total price,” he continues.
“A ban on hidden fees and drip pricing would represent a huge win for consumers and improve the functioning of markets where the practice has taken root. For the commission’s new majority, which is eager to protect consumers, such a regulation should be a high priority.”
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US reps reintroduce pro-transparency Boss Act
On the back of Tuesday’s Federal Trade Commission workshop, three US politicians have reintroduced the dormant Boss Act bill in an attempt to provide “transparency and regulation to the badly corrupted primary and second live events ticket marketplace”.
The Boss Act (Better Oversight of Secondary Sales and Accountability in Concert Ticketing) – a sister bill to the ultimately successful Better Online Ticket Sales (Bots) Act, which proscribes the use of ticket bots across the US – was first introduced in 2009 amid controversy over holdbacks for Bruce ‘the Boss’ Springsteen’s Working on a Dream tour. It was reintroduced in 2016 but failed find to the support to become law.
Its provisions include forcing primary sellers to disclose how many tickets will be offered for sale and make clear any fees up front – while also prohibiting promoters and ticketing companies from restricting where buyers can resell their tickets.
The US representative for the ninth district of New Jersey, Bill Pascrell Jnr – who yesterday introduced the Boss Act 2019 alonsgide fellow representatives Frank Pallone Jnr and Richard Blumenthal – comments: “Even though it’s 2019, the $9 billion live events ticket market resembles the Wild West: bereft of regulation and order, with bad actors around too many corners making a living by ripping people off. The Boss Act would finally impose hard regulation and transparency to the ticket market so that fans can find affordable tickets and enjoy some live entertainment in these uneasy times without fear of being taken to the cleaners.
“Americans have been gouged and gouged and then gouged some more”
“Americans have been gouged and gouged and then gouged some more. Ticket buyers don’t know how many tickets are going on sale or how many are being held back, can’t see what fees will be tacked on, and sometimes don’t even know if the tickets they are purchasing exist yet. For too long on these issues, our government has failed to hear the ghost of Tom Joad [a Springsteen song], the common man and woman. It’s high time government stands up for him and for them.”
Supporting Pascrell (pictured) and co’s efforts is the National Consumers League (NCL), whose executive director, Sally Greenberg, adds: “Anyone who has tried to buy a ticket recently knows that the ticketing marketplace is rigged against us. Fans are forced to navigate a maze of hidden fees, rampant ticket holdbacks that create artificial ‘sell-outs’ and illegal ticket-buying bots that cut in line to hoard the best seats before fans even have a chance to buy them.
“Congressman Pascrell’s Boss Act is the fix the broken ticket market needs. The bill will bring much-needed transparency to an opaque ticket-buying process and put consumers in control of their tickets. NCL applauds Congressman Pascrell’s leadership on this issue and looks forward to seeing this critical consumer protection measure signed into law.”
The text of the updated Boss Act 2019 can be read in full here.
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FTC workshop calls for greater enforcement of bot ban
The US Federal Trade Commission (FTC) on Tuesday held its first workshop examining online ticket sales, inviting lawmakers, academics and industry representatives from both the primary and secondary markets to examine consumer protection issues in how event tickets are sold on the internet.
Announced last October, the 11 June event included contributions from Ticketmaster’s head of music in North America, David Marcus, Live Nation president of US concerts Bob Roux, SeatGeek founder Russell D’Souza and International Association of Venue Managers (IAVM) chair Michael Marion, among others, and tackled alleged anti-competitive practices in the primary market, as well as greater enforcement on the US ban on ticket bots.
According to Law360 (via CMU), Joe Ridout of consumer rights group Consumer Action said the FTC being able to fine those using automated software to buy tickets is not a big enough deterrent. “The penalties just aren’t sufficient to deter bad actors without criminal penalties,” he told the panel, adding that the FTC should also bring tech firms into the debate on bots: “We need to do more if we’re going to get to the bottom of who’s behind bots”.
Addressing whether fees should be applied to the price of tickets up front, as in several other countries, Vox reports that both primary and secondary ticketers appeared to welcome a move towards that model. “Essentially every person on the panel agreed, appearing to politely beg the FTC to regulate them so that people would like them again,” the site reports, referencing customer dissatisfaction with ticket fees.
Gary Adler, executive director and counsel of the National Association of Ticket Brokers (NATB), which lobbies on behalf of ticket resellers, says both primary and secondary sellers appeared united on the need to increase transparency and end deceptive practices in the US ticketing market.
“There was a lot of mutual interest at the workshop, specifically around reducing fraud and deceit in the market and increasing transparency”
“I am happy the FTC invited me to participate, and I hope we can harness the momentum from the workshop to see some positive change,” he comments. “The workshop marks an an important day for anyone who enjoys live events and purchases tickets, or who works in the ticketing business and competes with large and powerful companies that control most of the supply of tickets and their price. There was a lot of mutual interest at the workshop, specifically around reducing fraud and deceit in the market and increasing transparency for consumers when it comes to ticket prices and fees.”
Adler says regulators must now push for a system in which consumers are informed of the number of ticket holdbacks and comps at the time they go on sale. “At the workshop it was revealed again that for high-demand events, oftentimes large percentages of tickets never go on sale to the public,” he comments. “Fixing this central problem should be a top priority so that consumers have the information they consider meaningful when deciding whether or not they are being offered a fair deal on tickets.”
Efforts to introduce similar transparency measures elsewhere have been unsuccessful: in 2017, Ontario, Canada, dropped plans for legislation that would have required ticket sellers to disclose how many tickets are available to the public for a given event seven days before they go on sale, allegedly under pressure from the primary sector.
“This begins most importantly with the first, initial sale of the ticket, but also during any resale of that ticket too,” continues Adler. “Hopefully the workshop is the catalyst for much-needed change in the ticketing system – as there is existing authority at the FTC as it relates to deceptive advertising and marketing practices which means the commission can act now, and where new authority is needed, there were renewed calls at the workshop for federal legislation to provide that authority or to create new rules for the ticketing market.”
AEG Facilities–SMG merger draws regulator scrutiny
Competition regulators on both sides of the Atlantic are examining the proposed mega-merger of venue behemoths AEG Facilities and SMG, as the companies look to roll up an international portfolio that includes more than 300 venues.
Should the deal proceed as the two companies hope, a new venture, known as ASM Global, will be launched, with headquarters in Los Angeles. It would oversee 310 arenas, stadia, convention centres and performing arts venues across five continents, including some of the world’s best-known live music locations.
The UK’s Competition and Markets Authority (CMA) announced today (11 April) that it has launched a preliminary (‘phase-1’) investigation into the merger, following a partial deferment of the case to British authorities by the European Commission.
Interested parties are invited to comment on the case – which will examine “whether the creation of [ASM Global] may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services” – before 29 April 2019, ahead of the 24 June deadline for the phase-1 decision.
The CMA investigation also reveals that the new company will be called Wildlife Holdings Inc., presumably trading as ASM Global. Wildlife Holdings – to be jointly owned by AEG (Anschutz Entertainment Group Inc.) and Onex Corporation – applied for the “ASM Global” trademark on 7 February.
Regulators at the Federal Trade Commission (FTC) in the US are also believed to be looking into the merger.
Plans for the deal revealed in early February by private-equity firm Onex, which completed its acquisition of SMG Holdings in January 2018. The investment powerhouse says it and AEG Facilities will each own 50% of ASM Global following the merger – a deal it expects to complete in late 2019.
Complicating the merger is a stipulation that certain venues owned by AEG, such as the O2, AccorHotels Arena, Mercedes-Benz Arena and Staples Center are excluded from the deal, with AEG also retaining control of its owned venues and entertainment districts in Los Angeles, London, Hamburg and Berlin, as well as its sports, music and sponsorship divisions.
The CMA investigation reveals the new company will be called Wildlife Holdings, trading as ASM Global
For its part, Onex has committed to contributing its entire equity investment in SMG into the merger. SMG’s assets include Manchester Arena in the UK, König-Pilsener Arena in Oberhausen, Germany, and numerous arenas, stadia and convention centres across North America.
While the merger hopefuls hailed the deal as “a major step for our industry,” competitors are less enthused about what it could mean internationally. Former AEG president Tim Leiweke, who now heads up Oak View Group (OVG), states that the company’s lawyers are poring over the merger agreement to “figure out whether this is anti-competitive,” while others are also expecting a degree of interest from regulators, given the number of venues that will be under the one roof.
“It’s a frightening prospect,” notes one venues veteran. “When Live Nation were mooted to be interested in purchasing SMG, that kinda made sense. But Live Nation is not in the same league as AEG when it comes to venue ownership.
“My real fear is that if this goes ahead, there will be zero room for negotiation with ASM Global, which will be so powerful that they could simply dictate terms for the likes of security, caterers, cleaning and other contractors.” A culling of staff across AEG Facilities and SMG would also be expected.
Another source notes that the deal could further escalate artist fees should AEG Presents leverage its position with its venues in bidding wars with Live Nation. And he suggests that a resurrection of the bookings feud between AEG and OVG ally Madison Square Garden Company could broaden to other rivals, as venue operators look to safeguard their interests.
“However, not everyone is against the deal. Brad Mayne, president and CEO of the International Association of Venue Managers, told Convene that he sees positives in the merger from a business point of view. “The more venues you manage, the greater strength you have to leverage in negotiations,” notes Mayne. “You can say to a vendor that if you’re willing to accept the terms of a deal in one venue that you can help them get into other venues that you manage.”
With officials at AEG and SMG gagged during the merger process, one key unanswered question surrounds ASM Global’s business model, as its constituents operate very different strategies: while AEG invests heavily in facility construction and development, SMG has historically collected management fees to run venues.
US Federal Trade Commission to look into online ticketing
The Federal Trade Commission is seeking input from the US entertainment industry and the general public ahead of a newly announced inquiry into the online ticketing market.
The FTC workshop, set for 29 March 2019, will explore “consumer protection and competition issues” related to buying tickets online – an area which has been a “frequent topic of consumer and competitor complaints”, according to the US competition watchdog.
The commission will tackle issues in both the primary and secondary markets, including transparency, lack of ticket availability and ticket bots (including the recently introduced BOTS Act) and pricing clarity, fees, speculative tickets and consumer confusion over primary vs secondary sellers, respectively.
“The commission has a strong interest in protecting consumer confidence in the online marketplace,” reads an FTC statement. “Issues that frequently arise in connection with online event ticket sales include practices that prevent consumers from obtaining tickets, mislead consumers about price or availability or mislead consumers about the entity from which they are purchasing.
“The workshop will discuss the current state of the online event ticket marketplace, shed light on industry wide advertising and pricing issues and explore ways to address deception beyond traditional law enforcement.”
“The workshop will … explore ways to address deception beyond traditional law enforcement”
US and global market leader Ticketmaster – whose parent company, Live Nation, was earlier this year accused by the US Department of Justice of using its monopoly power to pressure venues to use Ticketmaster – says it “welcomes and looks forward to participating in the FTC workshop on online ticketing in March 2019”.
“We encourage other ticketing companies to take part in educating consumers and lawmakers on the opportunities and challenges in the ticketing industry,” the company says in a statement, “and to join us in further action to improve the consumer ticket buying experience, including aggressive enforcement of the BOTS Act, the elimination of speculative ticket sales and restrictions on deceptive marketing and misleading ticketing URLs.”
Comments are invited from interested parties until 5 December 2018 by using this link. The FTC has also set up a dedicated email inbox, [email protected], for suggestions regarding workshop participants.
The FTC’s counterpart in Britain, the CMA, has been running an inquiry into secondary ticketing since 2016, and recently announced legal action against Viagogo for alleged breaches of consumer law.
FTC settles first complaint against social influencers
In news that bodes badly for the the 400+ Instagram personalities and other ‘influencers’ being sued for their paid social-media plugging of Fyre Festival, the US Federal Trade Commission (FTC) has settled a legal complaint against two influencers it charged with deceptively endorsing an online gambling service while failing to disclose they own the company – the first case of its kind.
According to the FTC, YouTubers Trevor ‘TmarTn’ Martin and Thomas ‘Syndicate’ Cassell – both well known in the online video-gaming community – both personally, and by paying other influencers thousands of dollars to do so, endorsed on YouTube, Twitch, Twitter and Facebook the lottery site CSGO Lotto, which is jointly owned by the pair.
Each defendant posted YouTube videos of themselves gambling on the website and encouraging others to do – videos cited as evidence by the FTC include INSANE KNIFE BETS! (CS:GO Betting) and “ALL OR NOTHING! (CS:GO Betting) – without disclosing they ran the company (Martin is its president, while Cassell is VP).
While Martin and Cassell dodged a fine, an FTC order settling the charges requires both in future to “clearly and conspicuously disclose any material connections with an endorser or between an endorser and any promoted product or service”.
“Consumers need to know when social media influencers are being paid or have any other material connection to the brands endorsed in their posts”
Cassell was previously rebuked by the FTC for his paid endorsement of the then-new Xbox One console, with the commission warning that the $30,000 promotion fell afoul of its rules for failing to disclose he and others were “paid by Microsoft to say nice things about Xbox One and its games”.
“Consumers need to know when social media influencers are being paid or have any other material connection to the brands endorsed in their posts,” says the FTC’s acting chairwoman, Maureen Ohlhausen. “This action, the FTC’s first against individual influencers, should send a message that such connections must be clearly disclosed so consumers can make informed purchasing decisions.”
Following the conclusion of the CSGO Lotto case, the FTC has sent warning letters (template here) to 21 other unnamed influencers regarding posts on Instagram, reiterating that they must disclose if there is a “material connection” between the endorser and the marketer of a product.