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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.”

 


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Advocates urge New Jersey to veto changes to ticket holdback law

A group of US secondary ticketing advocates have penned a letter urging New Jersey governor Phil Murphy not to sign a bill which would abolish 17 year-old laws capping ticket holdbacks to 5%. Already a controversial move, the bill was made even more so by the fact it was quietly fast-tracked through legislature without any public hearings on the matter.

Now, Scot X. Esdaile of US Minority Ticketing Group (USMTG), Tom Patania of NJ Ticket Brokers, Gary Adler of the National Association of Ticket Brokers (NATB) and Darnell Goldson of TicketNetwork have come together to urge Murphy to reconsider the proposed changes, which have been heavily pushed by venue owners in the state.

In the letter, the group stress the need for the live event sector to be centred on consumers and their protection. It points out that while the new amendments operate under the guise of being consumer-friendly with some good measures, the overall outcome would harm both consumers and local small businesses alike.

This sentiment is echoed by Phyllis Salowe-Kaye, executive director of the NJ Citizen Action advocacy group. Reacting to the proposed bill, she admits some of the parts of the bill are positive, but questions “why, at the same time, it’s removed some really important consumer protections, like the 5%.” She also pointed out the necessity for public hearings, saying: “These were all things we would have talked about if we had the opportunity go to a hearing and testify.”

“These were all things we would have talked about if we had the opportunity go to a hearing and testify”

The letter calls on research by the New York Attorney General which found more than 50% of tickets are commonly held back from big concerts and shows. A smaller pool of available tickets leads to soaring ticket prices and frustrated fans. This was certainly the case in 2009, when New Jersey native Bruce Springsteen held back some 2,262 tickets (12%) from public sale. Sixty per cent of the ten best sections in the venue were holdbacks, with only 108 of the seats closest to the stage available to the public.

Alongside the criticism of the removal of 5% on holdbacks, the letter also points out a number of other faults with the bill. Proposed changes would remove consumer protections regarding season ticket holders being able to lawfully sell tickets back to the venue for events they aren’t able to attend.

It also adds uncertainty to consumers’ ability to gift, sell or donate tickets they have purchased – the bill gives power to ticket issuers to revoke tickets for any reason without conditions.

However, as stated by consumer advocates and politicians alike, the bill does propose some important, consumer-friendly measures. These include a ban on venues overbooking concerts, a ban on ‘bot’ technology and a clear refund policy.

 


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Non-transferable tickets outlawed in Connecticut

In a move billed as “protecting consumers who purchase e-tickets”, the US state of Connecticut has legislated to prohibit the sale of non-transferable paperless tickets.

A growing number of major artists – including, prominently, Iron Maiden – are opting for named electronic tickets, which generally require proof of ID to enter the venue, in a bid to minimise secondary sales.

However, Connecticut house bill 7114 (HB 7114) – An act concerning the sale of entertainment event tickets on the secondary market – which was signed into law on Tuesday by governor Dan Malloy (pictured), outlaws the practice unless “the purchaser of such tickets is offered the option, at the time of initial sale, to purchase the same tickets in another form that is transferrable”.

It also prohibits venues from denying admission “solely on the grounds that such ticket has been resold”.

HB 7114 mirrors a similar piece of legislation in Virginia, HB 1825, which was introduced by local politician Dave Albo after he was unable to resell his ticket for the aforementioned Iron Maiden tour.

“This new state law will give people choices when purchasing tickets,” says Connecticut senator Kevin Witkos, who backed the bill. “It also seeks to prevent against problems when entering a venue if an individual has a ticket that was resold to them.

“This is consumer friendly legislation that updates state law to apply to modern technology and practices of purchasing tickets online”

“This is consumer friendly legislation that updates state law to apply to modern technology and practices of purchasing tickets online.”

The passing of the new legislation was welcomed also by ticket brokers’ association NATB, whose Protect Ticket Rights campaign is committed to an “open” secondary market free of restrictions on resale.

“This new law will protect consumers from unfair and restrictive practices that companies like Ticketmaster and others in the primary ticket market employ to restrict the purchase, sale and transfer of purchased tickets,” comments NATB (National Association of Tickets Brokers) executive director Gary Adler. “These restrictions lead to a market with less choice and higher prices, and we applaud the Connecticut legislature and Governor Malloy for protecting ticket rights.

“This important new law will stop practices like restricted paperless ticketing that harm consumers and the function of a fair and level secondary resale market for tickets. In an open market, if you purchase a ticket, you can do whatever you like with it – including selling it for less or more than you paid – depending on what the market and demand will bear, without onerous strings attached.

“Paperless ticketing is presented as a measure to reduce fraud, but fraud on resale exchanges is not a pervasive problem. While paperless on its own is perfectly fine as a convenience, in practice there are usually restrictions that are designed to prohibit or limit the ability to resell tickets. It is just one example of how large, powerful players in the ticketing system overreach, and this legislation will help to loosen their chokehold and protect consumers.”

 


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Nissen assets seized over $120m ticket ‘scam’

A New York judge has ordered the seizure of cash, property, shares and other assets from a ticket broker who allegedly conned investors out of US$32 million to prop up a “basic yet audacious” ticket-selling scam.

Jason Nissen and eight of his companies are accused of funnelling more than $120m through a ponzi scheme in which investors were promised “impossibly high returns” on resold tickets for events including Broadway musical Hamilton, Adele’s Adele Live 2016/2017 world tour, the Super Bowl and several other sporting events. In reality, allege prosecuting lawyers Morrison Cohen, “the ‘returns’ on the ticket sales were illusory, financed by cash infusions from new investors who were told their money would be used to purchase tickets for resale”.

The two investors who brought the lawsuit, Taly USA Holdings and SLL USA Holdings, said in the initial complaint they have been “damaged in an amount to be determined at trial, but believed to be in excess of $25m, plus interest”.

According to the complaint, Nissen confessed he had faked financial documents in order to secure investment from Taly and hide the scam from other investors. “They’re inflated numbers,” he allegedly told Taly’s Yaron Turgeman in a phone conversation. “We really had those events and really sold the tickets and they’re inflated, you know, two- to three-fold depending on how it was.”

In a court order yesterday, judge O. Peter Sherwood authorised New York sheriffs to seize five of Nissen’s bank accounts, his stocks and shares in two companies (New World Events Group and National Events of America) and two properties, both in New York, with all monies held until the conclusion of the case.

“The ‘returns’ on the ticket sales were illusory, financed by cash infusions from new investors”

In addition, Nissen is forbidden from making “any sale, assignment or transfer” or property or money “in which the defendants have an interest as will satisfy $25m” to any person other than a sheriff.

While the case continues, Sherwood says he believes the Taly and SSL “have a cause of action for a money judgment against the defendants for no less than $25m” and that “plaintiffs are likely to succeed”.

Nissen’s National Event Company (NEC) was part of the National Association of Ticket Brokers (NATB), roughly equivalent to the Association of Secondary Ticket Agents (ASTA-UK) in the UK, prompting criticism from some outlets about the association’s effectiveness in policing its members.

In a response provided to TicketNews, NATB says the criticism is unfounded, suggesting it is “outlandish […] to suggest that our trade association should have known about it and taken measures about it before law enforcement did”.

NEC’s website was still up as late as yesterday, although it now shows an “under construction” page. National Event Holdings has reportedly filed for bankruptcy.

Hamilton last summer became the most expensive ticket in Broadway history after producers raised the price in response to touts taking a reported $30,000 out of every show.

 


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