Lawsuit filed against Viagogo over refunds
Secondary ticketing platform Viagogo is the target of a class-action lawsuit for allegedly retroactively axing its full cash refund guarantee amid the pandemic, depriving consumers of the refunds they are entitled.
The Florida-based claimant alleges that she paid US$410 for tickets to see Tool on 19 April but Viagogo refused to refund her, despite its guarantee which promises to fully refund a customer who bought tickets to an event that was cancelled.
The complaint alleges that Viagogo “wrongly refuses to classify events as ‘cancelled,’ allowing it to maintain dominion and control over even more funds which it has no legal right to possess or use for its own business purposes.”
It goes on to allege that the company is attempting to force consumers to suffer losses it should be covering due to its cash-back guarantee on events that are cancelled.
“To avoid financial losses due to the Covid-19 pandemic, [Viagogo] has unilaterally and unconscionably changed its policy”
“To avoid financial losses, and potential future losses, due to the Covid-19 pandemic, Defendant has unilaterally and unconscionably changed its longstanding policy, including for customers who purchased tickets while Viagogo actively promoted and promised its Viagogo Guarantee, to instead leave its customers holding the bag,” the lawsuit claims.
The lawsuit looks to represent Florida residents who used Viagogo to buy tickets to any event that was cancelled or constructively cancelled due to the Covid-19 pandemic, and who have not been issued a refund.
Also facing legal action is Eventbrite, which is accused of depriving fans of refunds for “indefinitely postponed” events.
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.
Could vouchers become a trap for promoters?
Live music markets in Europe have looked to vouchers as a cure for their coronavirus-inflicted crises. The effect of this type of medicine seems to be based upon a presumption that ticket owners will hold on to their rolled-over tickets, or use vouchers for another show instead, or wait for cash refund until late 2021.
Well, what if they don’t?
Voucher schemes have turned millions of ticketholders into promoters’ creditors. They can be divided into three sub-groups: Those who can afford it; those who can’t really but were not given a choice; and those whose present ambivalence may well turn into anger with passing time.
So far, the economic prognosis is that the effect of the corona crisis has not yet fully revealed itself and it will not be until three to six months from now when it will really hit hard, once various government support and help programmes are over.
Everything points to this crisis being the strongest in decades. The natural reaction is a great deal of uncertainty and, in this situation, the live music industry in countries using voucher schemes has sent a very clear message – if worse comes to worst, it will be the customers who will bear the load.
Ticketholders might be facing situations where they need access to at least some part of the cash spent on tickets to cover their daily needs. As their chance to get an immediate, full refund from promoters is either restricted or made temporarily impossible, then they might be tempted to offload what they have in the only way possible – on the secondary ticketing market.
Voucher schemes have turned millions of ticketholders into promoters’ creditors
Desperate times call for desperate measures and ticketholders might have to give away their tickets as quickly – and therefore cheaply – as possible. If this happens to a significant extent, then it could affect the sales of the postponed events in question, as well as newly announced gigs.
Nowadays, promoters postpone their shows hoping for the best. Now, if it is a sold-out show, then one might worry only about lowering the profit margin, but if there is still some way to go to break even, then the promoter has every reason to worry.
Postponed shows were negotiated at the peak of the conjecture cycle with ticket prices reflecting both the expected buying power projected into selected capacities, as well as accordingly set fees and subsequent other costs.
The upcoming 2021 season will be tough. Experts’ projections quoted in media see a decline in revenue of more than 50% for the leisure sector next year in some markets. Better than the current drop of 80-90%, but hardly a full recovery. By the nature of things, it can be reasonably expected that the lost revenue will be distributed in an uneven manner, show-per-show.
The highest risk lies with events that have not yet reached breakeven and that have found themselves in a 2020 position that they probably aim to roll over to 2021. If an event, traditionally a festival, has tickets scaled from an early-bird rate to an on-the-door price and is now somewhere in the middle, then promoters will probably follow up the sales from the point an price that they stopped on prior to coronavirus, and offer a similar or identical line-up (value) in return.
In cases where the contracts were not renegotiated for a lower guarantee, then promoters will have both prices and costs set on 2020 expectations for the next season, which might deliver lower revenue. Maybe upwards of 50% lower.
It is not lowered income that breaks promoters’ neck, it’s the unpayable bills accumulated from previous commitments that do it
Additionally, we need to account for the risk of cheap tickets on the secondary ticketing market. If tickets are available for less that than the official presale on these sites, either for the very same event, a similar event or event in the same time period, or a better event, then it will likely redirect the cash flow from official presales and further lower the promoter’s future revenue.
If a market revenue goes down by 50 % and the remaining potential half is further affected by cheap resales, how much can reasonably be expected to be left over? If such a scenario becomes reality, then the expectations of future turnover might not (sufficiently) materialise, leaving the promoter with obligations to fulfil with insufficient funds.
Not to mention, that standard competition will continue, and new shows will have the advantage of a wow-effect over postponed and rolled-over events. Also, corporations in some countries are likely to come out of the crisis with loaded cash-flow from temporarily non-refunded tickets for cancelled arena shows with a limited time to reinvest it.
In this light, it might seem that the intention to lower artist guarantees by 20 % in 2021 is merely cosmetics.
If it is the case and all options are still on the table then, in some ways, it is not a bad option to leave in 2020 what belongs in 2020: ask agents to return paid advances, refund ticketholders or press on with substitute events and enter the next year without a ball and chain.
Generally speaking, it is not lowered income that breaks promoters’ neck, it’s the unpayable bills accumulated from previous commitments that do it.
Borek Jirik has worked as a show and festival promoter and arranged technical production for various arena and stadia tours. He now consults for live events, focusing on quality management, safety plans, studies, publishing and research. He was an initiator and editor of the Comprehensive Guide for Event Production and Organisation in the Czech Republic, 2018.
Eventbrite facing legal action over refund policy
Eventbrite has become the latest ticket seller to be hit with a lawsuit over its alleged non-payment of refunds for cancelled or postponed events.
In a consumer class-action complaint filed on 4 June in the US district court for northern California, ticket buyers Sherri Snow, Anthony Piceno and Linda Conner accuse Eventbrite of “deceptive practices relating to its sale of live events tickets and its refusal to provide refunds for live events that have been canceled, rescheduled and/or postponed.”
According to the plaintiffs, by “shift[ing] responsibility” for issuing cash refunds to event organisers, Eventbrite is in violation of section 22507 of California’s Business and Professions Code, which requires that the “ticket price of any event which is canceled [sic], postponed, or rescheduled shall be fully refunded to the purchaser by the ticket seller upon request.”
“After the coronavirus outbreak forced the cancelation or postponement of most large events and public gatherings, Eventbrite has consistently refused to allow for refunds for canceled, postponed and/or rescheduled events, including when events are ‘indefinitely’ postponed,” reads the complaint.
“Instead, Eventbrite has tried to shift responsibility to event organizers, allowing them to refuse refunds for cancellations, postponements and rescheduled events.”
“Eventbrite has consistently refused to allow for refunds … including when events are ‘indefinitely’ postponed”
“At best,” the complaint explains, “Eventbrite has urged some organizers to ‘make good’ when events are canceled, postponed and/or rescheduled” between 15 March and 15 May.
This, the plaintiffs say, does not go far enough, because it allows promoters to offer credit or vouchers for future events “no matter when in the future the event might occur or how much or when the credit might apply”.
While many European concert organisers have been empowered to offer ticket vouchers instead of cash refunds, no legislation of the sort exists in California or the wider US.
Among other forms of redress, the trio seek monetary damages, an order that Eventbrite will cease the “unlawful, deceptive, fraudulent and unfair business practices” alleged in the complaint, and legal costs, to be determined at a jury trial.
News of the lawsuit, revealed in the company’s latest filing with the US Securities and Exchange Commission (SEC), comes as Eventbrite records a month-on-month increase in ticket sales for the first time since the Covid-19 pandemic hit in March.
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.
Ultra Music Festival sued over no-refund policy
Ultra Enterprises, the company behind Miami’s Ultra Music Festival (UMF) and Ultra music events globally, has been hit with a lawsuit over its alleged refusal to offer cash refunds to those with tickets for the cancelled UMF 2020.
The 2020 festival, scheduled for 20–22 March in Miami, Florida, was called off in early March, becoming one of the first casualties of the Covid-19 pandemic that went on to claim almost the entire festival summer.
The proposed class action, filed in the US district court for southern Florida, accuses Ultra of conversion and unjust enrichment. Plaintiffs Samuel Hernandez and Richard Montoure claim the company’s insistence that they must hold onto their tickets and transfer them to UMF 2021 or ’22 is based on “impermissible ticket contract terms”, according to Law360; Ultra’s terms and conditions say it reserves the right to issue a full or partial refund, or no cash refund at all.
This, argue Hernandez and Montoure’s lawyers, means UMF – by reserving the right to keep money paid for tickets regardless of whether it puts on the show – is “essentially (and impermissibly) rendering its obligations under the [T&Cs] illusory, and the agreement itself an unenforceable unilateral option contract.”
“We do not believe Ultra Music Festival has the right to shift the burden of this extraordinary crisis onto its customers”
Hernandez sought refunds on four of six tickets he bought, for a total of US$3,000, while Montoure wanted a refund of two three-day passes he purchased for about $1,000.
“We understand that the Covid-19 pandemic has impacted every part of the global economy but we do not believe that gives the Ultra Music Festival the right to shift the burden of this extraordinary crisis onto its customers, who, in some cases, paid hundreds of dollars to attend this festival,” Joe Sauder of Sauder Schelkopf – which is also suing South by Southwest on behalf of out-of-pocket ticketholders – tells Rolling Stone, “and now the Covid-19 pandemic has or will preclude them from ever using any credit.
“We look forward to seeking to recover cash refunds for our clients and the class members.”
In addition to Ultra and South by Southwest, several ticketing companies are also facing legal action over their refusal to offer cash refunds for cancelled shows, with SeatGeek and StubHub the target of one and two legal actions, respectively.
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.
Portugal to ban festivals until 30 September
Under the Portguese cabinet’s stabilisation plan, festivals and shows “of a similar nature” will not be permitted until October 2020 and organisers will not be obliged to offer fans a cash refund for cancelled events.
The plan, which needs approval from the Portuguese parliament before becoming law, offers some clarity to promoters in the country, many of whom were awaiting an official declaration before deciding the fate of their 2020 events.
Festivals including NOS Alive, Paredes de Coura, Meo Sudoeste, Super Bock Super Rock and EDP Vilar de Mouros have acknowledged the government’s decision and state they are waiting for parliament to approve the measures before announcing how they will proceed.
Organisers of NOS Primavera Sound Porto, which had moved to early September in an attempt to avoid virus-related restrictions, made a similar announcement, adding that: “It seemed like a good idea, when we decided to celebrate Primavera in summer, we did it because we believed that in September we would be living in safer times.
“This new scenario does not allow us to celebrate what we wanted most. We continue to work hard so that, in 2021, we can celebrate more than NOS Primavera Sound.”
“When we decided to celebrate Primavera in summer, we did it because we believed that in September we would be living in safer times”
Under the government guidelines, organisers of festivals and other events scheduled for between 28 February and 30 September 2020 which were unable to take place due to the Covid-19 outbreak, can offer ticketholders a voucher of equal price to the original ticket.
This “guarantees the rights of the consumers”, reads the government document.
However, organisers of Afro Nation, which was due to host its second outing from 1 to 3 July, received criticism from some fans on social media upon announcing that they will not be issuing refunds for Afro Nation 2020.
“According to the new Portuguese law, your ticket will be automatically transferred to the new date,” reads a statement from organisers.
“Should you wish not to transfer to 2021, you will have the opportunity to sell your ticket via our primary ticket provider Festicket. Afro Nation will delay putting any tickets on sale in order to give ticket holders as much time as possible to resell tickets if that is what you choose to do.
“Your provider will be in touch today via email with further details on how to transfer to 2021 and how to resell your ticket via Festicket.”
LN offers US fans 150% credit on rescheduled shows
Fans who have tickets to postponed Live Nation shows in the US can opt to exchange it for a voucher worth 150% of the original value, make a donation to health workers, request a full refund and more under the new Rock When You’re Ready programme.
Following Ticketmaster’s clarification of its refund policy in the United States last week, the ticketer’s parent company Live Nation has laid out a number of options for fans with tickets for postponed events.
Under the programme, which starts from 1 May, ticketholders can retain their tickets for the rescheduled date or swap it for Concert Cash – credit for use on the Live Nation site worth one-and-a-half times the original ticket price.
Fans can also make a donation to frontline health workers through the Hero Nation programme.
Full refunds are also available, if requested within 30 days of the announcement of rescheduled dates. Tickets to cancelled shows will be refunded automatically unless fans voluntarily opt in to other programmes.
Live Nation has laid out a number of options for fans with tickets for postponed events
AEG Presents – along with Live Nation one of the big two global concert promoters – has announced a similar plan, offering a 30-day window to receive refunds for postponed events and automatic refunds on cancelled events, starting from 1 May.
According to Ticketmaster president Jared Smith, 30,000 events it has sold tickets for have been postponed or cancelled due to coronavirus. Of these, 12,000 have been cancelled outright and around 5,000 rescheduled. Promoters are working to reschedule the remaining 14,000 shows.
The question of refunds has been hotly debated, as the coronavirus crisis takes its financial toll on the live sector.
In Europe, a number of industry associations have lobbied for the option for organisers to offer ticket vouchers, with governments in Germany, Italy, Poland and Portugal introducing voucher schemes, and the Dutch national consumer protection agency offering guidelines to sectors wishing to offer credit instead of refunds.
Third of TicketCo customers in UK, Norway opt for vouchers
New data obtained by event payment platform TicketCo has shown that over third of consumers that bought tickets via its platform in the UK and Norway chose to be reimbursed with credit or to forgo their money in place of a refund.
TicketCo has developed a functionality to allow event organisers to offer vouchers worth the value of original spend and payment waiver options as an alternative to cash refunds.
The TicketCo feature comes as the German government today (8 April) introduced legislation allowing promoters to offer credit in place of refunds for cancelled events, joining authorities in countries including Poland and Italy to implement a voucher scheme.
Following the first full week of data collection, results show that 32% of customers in the UK chose the voucher, with just over 2% forgoing their money in support of the event organiser.
In Norway, a similar percentage of ticketholders passed on refunds, with a much higher proportion (15%) waiving any form of compensation and 20% choosing vouchers.
“We hoped our waiver and voucher features would be chosen in support of event organisers and the response from the market so far has been positive”
“We sincerely hoped our waiver and voucher features would be chosen by some in support of event organisers and the response from the market so far has been positive,” comments TicketCo co-founder Carl-Erik Michalsen Moberg.
“One week of data is not much to build solid statistics on, but encouragingly it demonstrates the strength of goodwill that exists in the event industry that we had to share. It’s a truly uplifting show of support.
“The impact will make a real difference to event organisers,” continues Moberg. “This proves organisers and ticket buyers are close and the connections are strong. It’s clear ticket buyers where they can want to help their favoured organisers through this crisis.”
In addition to the refund alternative features, TicketCo has also created new functions to help event organisers manage high volumes of postponements and cancellations, as well as launching pay-per-view streaming service, TicketCo TV. The platform allows promoters to broadcast virtual events and sell tickets for them via the TicketCo app.
TicketCo has offices in Norway, the UK, Poland and Sweden.
Germany introduces ticket voucher scheme
The government of Germany confirmed today (8 April) it will allow promoters to offer customers credit instead of refunds for cancelled events, becoming the latest country to introduce a voucher scheme to shield its live sector from the financial impact of the coronavirus.
A news release from the German federal government explains: “According to existing laws, holders of tickets can request reimbursement of the entry and service fees they have already paid. [However], many operators currently have no new income. If they had to reimburse fees for all canceled events at short notice, the existence of many of them would be threatened. A voucher solution, therefore, could be of great help.”
“A wave of bankruptcy would also likely mean that claims for reimbursement could no longer be made,” adds the announcement.
“A wave of bankruptcy would mean that claims for reimbursement could no longer be made”
As reported by IQ on Friday, Germany was one of a number of European states considering legislating in favour of ticket vouchers and/or an extended refund grace period – measures which have already been introduced in countries such as Italy and Poland.
For all tickets purchased before March 8, fans who wish to receive credit in lieu of a cash refund (refunds will still be available for those who need them due to their “personal situations”) will receive a voucher that expires at the end of 2021. If the voucher is not redeemed by that date, the organiser of the event must refund its value.
Bremen-based CTS Eventim, Europe’s biggest ticket seller, welcomes the introduction of a voucher scheme, saying the move represents a lifeline to the corona-hit German live music industry.
“The voucher solution… gives promoters the vital liquidity they need to continue operating”
“We welcome the initiative of the federal cabinet to enact a voucher scheme for cultural, concert, sports and leisure events,” says the company’s CEO, Klaus-Peter Schulenberg. “Culture is systemically essential, and the bill proposed today by the government supplements the current contract law governing events with urgently needed provisions to mitigate the financial impacts of the Covid-19 pandemic for promoters, and thus for the entire cultural sector in Germany.
“The resolution is a very important step towards preserving cultural diversity in Germany. The voucher solution is pure consumer protection at the same time, because it gives promoters the vital liquidity they need to continue operating as going concerns during and beyond the coronavirus crisis. Consumers are thus protected from what would otherwise be unavoidable losses due to insolvency.”
StubHub sued over new no-refund policy
Secondary ticketing giant StubHub has become the first ticket seller to face legal action as a result of a refund policy that offers credit vouchers in lieu of cash.
Ticket vouchers have become a popular refund mechanism for cancelled shows during the ongoing coronavirus crisis, with a growing number of governments backing industry associations’ calls for their members to be able to temporarily hold onto customers’ funds. Vincenzo Spera, president of Italian promoters’ association Assomusica, last week described a government-backed voucher scheme in Italy as a “lifesaver” for the struggling concert business.
StubHub similarly recently moved to a voucher-only model in North America, amid speculation the US ticket resale site, which is in the process of being acquired by Viagogo, is struggling financially.
Now, a class-action lawsuit filed in Wisconsin on Friday (3 April) afternoon accuses StubHub of violating its own consumer protection promise with the move, with plaintiff Matthew McMillan saying the company is “retroactively” backing out of its “longstanding ‘FanProtect’ guarantee […] in response to apparent liabilities it would incur stemming from the Covid-19 pandemic.”
“Instead of instituting responsible financial transaction policies, StubHub made it their practice to pay ticket sellers before the event had occurred
According to Law360, McMillan’s suit alleges StubHub brought on its financial crisis itself through its own policy of paying ticket resellers (touts/brokers) before the event has occurred, despite the “entirely foreseeable scenario that world occurrences would cause the simultaneous cancellation of numerous public events.”
“Instead of instituting responsible financial transaction policies, defendants [StubHub] made it their practice to pay ticket sellers before the event had occurred,” the complaint reads, “exposing themselves to the possibility that they would be left holding the bag (or have to ignore their own guarantee and cheat their customers) if an event was canceled and they could not promptly collect from sellers.”
In a statement, McMillan’s lawyer, Nicholas Coulson of Liddle & Dubin, says: “Dumping promised refunds for expiring coupons during the time of greatest financial suffering in recent history is cruel and wrong, especially because people have no idea if they’ll even be able to use the coupons. We don’t know what the next 12 months are going to look like.
“Through this action, we hope to provide people some small bit of relief during this uncertain time.”
As of 25 March, StubHub is offering fans with tickets for cancelled events with a coupon valued at 120% of their original purchase.
Ticket voucher laws introduced in parts of Europe
Governments in Italy, Germany and Poland are looking to introduce measures to allow event organisers to offer ticket vouchers, instead of cash refunds, as compensation for cancelled shows.
As more and more events around the world are cancelled and postponed due to the coronavirus outbreak, the issue of how and when to compensate customers has been much debated.
The increasing uncertainty as to when business as usual will recommence and the inevitable drop-off in ticket sales has led industry associations – as well as representatives in other affected sectors – to point out that an impending cashflow crisis renders typical refund practices obsolete.
The option to offer customers a voucher, worth the original ticket price or more, for future events has been championed by associations across the world, with many also pushing for extension to refund grace periods.
It now appears that some governments are listening to those calls.
Italy’s Assomusica has thanked the Italian government for its measures to support the cultural, entertainment and music sectors, which include allowing the offering of vouchers as a valid form of reimbursement.
The association estimates that, by the end of May, 4,200 shows will have been cancelled or postponed in Italy, representing losses of €63 million in just over two months for the live sector.
“We ask the European Commission, MPs and the Culture Committee to extend this lifesaver to the other countries which, through the introduction of vouchers to replace tickets, allows the spectator not to give up their concert and companies not to go to default,” comments Assomusica president Vincenzo Spera.
“We ask the European Commission, MPs and the Culture Committee to extend this lifesaver to the other countries”
The German government, which recently dedicated a €50 billion financial stimulus package to its creative and cultural industries, is looking into similar measures, with the so-called Corona Cabinet asking the Department of Justice to draw up a law permitting organisers to offer customers a voucher instead of a refund.
Any voucher must be valid until the end of 2021, with organisers obliged to refund the ticket price if the voucher has not been redeemed within this time.
The regulation applies to all tickets for concerts, sporting events and other kinds of shows bought before 8 March.
Managing director of the German Culture Council, Olaf Zimmermann, calls the regulation “an important act of emergency aid”.
“We ask all concert, theatre and exhibition visitors for their understanding of this inevitable measure,” says Zimmermann.
Meanwhile, in Poland, authorities have adopted regulations to extend the refund grace period to 180 days from the date of cancellation and allow organisers to offer a voucher instead of a cash refund, valid until within a year of the day on which the cancelled event was to take place.
All mass gatherings were cancelled in Poland on 10 March, with further restrictions including a ban on gatherings of more than two people and the closing of parks put in place more recently.
In the Netherlands, a number of ticketing agencies are taking matters into their own hands. Ticketers Eventix and Yourticketprovider are offering fans a donation option, encouraging ticketholders to allow organisers to retain a portion or all of the value of the ticket in a show of solidarity. Yourticketprovider is also working on offering a voucher option to ticketholders.
Read more about the great ticket refund debate here.