Is this the end of online ticket rip-offs?

by Donna Chisholm / 01 September, 2018
Taylor Swift. Photo/Getty Images

Taylor Swift. Photo/Getty Images

RelatedArticlesModule - Online ticket rip-offs

Online ticket rip-offs seem part of the deal with must-see shows – and it’s not just bots doing the hiking. Will the Commerce Commission case against reseller Viagogo make a difference? 

Concert promoter Layton Lillas reckoned he had ticket-selling site Ticketmaster Resale dead to rights. It was 2016, and in the midst of an international outpouring of grief over the January death of David Bowie, Lillas and colleague Robyn Alexander were touring the UK tribute show Ultimate Bowie.

The Timaru gig in an otherwise successful 10-date tour had, however, bombed. In a month on sale through Ticketek, just two $69.90 tickets were sold. But over on the Ticketmaster Resale website, 12 tickets were up for grabs, at almost double the price, allegedly for sale by people who’d bought them but could no longer attend the show. Despite his “cringeworthy embarrassment”, he said in an email to other promoters, it was “perhaps the most telling statement of all” in their ongoing battle to prevent ticket scalping.

The tickets were clearly fraudulent. But who committed that fraud, and how, legally, could the fraudsters be stopped? It’s a problem that promoters say they are impotent to address because they are hamstrung by exclusive deals between venues and ticket sellers.

But as pressure mounts from disgruntled consumers, the impasse may soon be broken, with the Commerce Commission announcing its first legal case against resale site Viagogo, which was the subject of 400 complaints in a few months this year, and Consumer Affairs Minister Kris Faafoi asking officials to investigate how the public can be better protected. The commission’s civil suit, under the Fair Trading Act, will seek a restraining injunction against Viagogo’s activities, alleging it made a series of false or misleading claims, including that it was an “official” seller when it was not, that consumers were guaranteed to receive valid tickets and that tickets were limited and about to sell out.

The moves won’t come soon enough for the scams that will no doubt blight the season’s big-name acts, with Bob Dylan, Pink, Taylor Swift, Cher, David Byrne and Shania Twain scheduled to play here in coming weeks, but follow international attempts to crack down on scalpers.

In Australia, the states of Victoria and New South Wales have recently introduced laws capping resale prices at 10% more than the original, and in the UK and Europe, Ticketmaster is closing its ticket-resale sites Get Me In! and Seatwave. It says it will instead offer resales at face value only, with a 15% booking fee. But Ticketmaster in New Zealand says it won’t follow suit here. Ticketmaster representatives did not respond by our deadline to a request for an interview, and Ticketek declined to comment.

Bob Dylan. Photo/Getty Images

Bob Dylan. Photo/Getty Images

The same issues have been dogging the industry for a decade or more – in 2010, the US Federal Trade Commission settled a case with Ticketmaster that alleged it used “bait and switch” tactics to sell tickets. Ticketmaster agreed to refund consumers who bought tickets to Bruce Springsteen concerts in 2009 from its resale site, TicketsNow, after its original site displayed a “No Tickets Found” message. The FTC charged that Ticketmaster used the page to steer unknowing customers to TicketsNow, where tickets were offered at up to four times their face value. That same year, Ticketmaster merged with events promoter Live Nation, and the global entity has dominated the concert and ticketing business since. In 2016, Live Nation admitted providing tickets directly to the resale market in Italy.

A 2016 report by the New York Attorney General’s office found most tickets for popular shows did not even make it to sale to the general public, with up to 40% pre-sold, for example, to fan clubs or for corporate packages, and others held for “insiders”.

Complaints have accelerated in recent years, and promoters say rip-offs are rife, despite repeated warnings to consumers. Last year, a joint report by Consumer NZ and its Australian counterpart, Choice, said ticketing resale websites continued to offer fake tickets and mislead consumers because there is no real enforcement. It said Viagogo accounted for the majority of consumer complaints about service.

The scams come in seemingly endless forms, from grossly inflated prices to counterfeit or duplicated tickets. But promoters suspect the ticket sellers themselves are part of the problem, claiming they are diverting tickets supplied to them for original sale to resale sites, where they take a 10% commission from the seller and 15% from the buyer.

“We don’t believe they are genuinely taking a ticket from someone whose aunty is sick and they can’t go to the show,” says industry pioneer Ian Magan. “We believe they are taking tickets from the normal- priced inventory they are holding on our behalf. They take a bundle out and pretend they are owned by someone else.”

That view is backed by notorious US scalper and “ticket bot” inventor Ken Lowson, who is reputed to have made $25 million before the FBI arrested him in 2010. (After a plea deal, he was released on probation.) In an interview with Stuff last year, he called global Ticketmaster “the mother scalper” for supplying Viagogo with tickets.

Pink. Photo/Getty Images

Pink. Photo/Getty Images

Up against bots

If you’ve ever jumped on to a ticket site waiting for an in-demand show to go on sale, feverishly hitting the refresh button, it’s Lowson and operators like him who’ve severely dented your chances of success. The computer programs, or bots, Lowson pioneered fill out Ticketmaster’s required fields in a fraction of the time you can, and make thousands of simultaneous requests using different IP addresses. Once the bots “buy” the tickets, they’re flipped on for resale.

Lowson, who now advises on how to protect consumers from the “cancer” of resale sites, welcomed the Commerce Commission’s action against Viagogo, which has been associated with the sale of fake tickets and the resale of others at many times their face value.

Resale sites such as Ticketmaster Resale and Viagogo usually appear first when internet searchers seek out tickets to a concert, thanks to their big advertising spends on Google Words and Google Ads, which affect search algorithms and enhance their apparent legitimacy. Adding to consumer confusion is the fact that Ticketmaster also lists resale tickets for Ticketek shows on its primary ticket site, and then redirects buyers to the resale site.

“The average punter is constantly told to buy tickets only from a verified ticket seller like Ticketek or Ticketmaster, so this practice that Ticketmaster has adopted, of listing all shows on its primary page, is very misleading,” says promoter Louise Hunter, of Adrian Bohm Presents. “I have repeatedly asked Ticketmaster to take the Ticketek shows off its primary website, but it doesn’t engage. It’s not illegal but it is not in the best interests of the ticket-buying public. It is effectively selling our tickets twice, with a 25% commission on the resale.”

For UK comedian Bill Bailey’s tour here in September and October, Viagogo and Ticketmaster Resale are advertising tickets at double the price of those still available on Ticketek. It is a potential double hit for promoters if consumers land on the resale sites first and think the original tickets are either grossly overpriced or sold out.

The then NZ Entertainment Operators Association (now NZ Promoters Association) took its concerns to Ticketmaster representatives, including Ticketmaster’s Australasian managing director, Maria O’Connor, at a tense meeting in Auckland in 2016, at which the Ultimate Bowie case was exhibit A. Minutes of the meeting note that Ticketmaster was “rigorously challenged” over whether it was selling tickets itself through Ticketmaster Resale.

“We told it that we thought it was holding back a bunch of tickets to sell on the resale site at an inflated price,” says veteran promoter Manolo Echave. “It said, ‘That’s categorically not correct.’” But, when pressed on the Ultimate Bowie case, O’Connor “did acknowledge the situation did appear to breach … the seller’s terms and conditions to constitute a fraud, and that there needed to be more controls put in place,” the minutes say.

Promoters told the Listener that Ticketmaster had promised to get back to them about how the Bowie resales had occurred, but had not – despite being reminded as recently as a few months ago by Magan.

Pacific Entertainment’s Robyn Alexander says it doesn’t appear the ticket seller has put any more controls in place to prevent a repeat, as promoters continue to see bundles of six or 12 tickets for shows regularly appearing on the Ticketmaster resale site, “although we’ve never again been in the unique situation presented by Ultimate Bowie to be able to prove whether any other tickets are outright frauds”.

Bill Bailey. Photo/Getty Images

Bill Bailey. Photo/Getty Images

Fine print

Mostly, she says, desperation to get tickets for in-demand shows drives many risky purchases. “Most of the frauds are happening with shows that sell out really quickly, but the resale situation is now permeating all our shows, including those that aren’t sold out.”

In the 2016 meeting, Ticketmaster representatives strongly denied any involvement in ticket resales, by its own staff or outside contacts. It maintained that other than connecting buyers and sellers, it was not a party to transactions, was not involved in setting the prices requested for resold tickets and its listed terms and conditions for buyers and sellers were strong enough to control the parties. It said resales couldn’t be stopped and its involvement was justified “on the premise that it is forcing transparency, providing a legitimate platform to protect genuine trading, backed by a money-back guarantee, while trying to curtail and deal with fraudsters”. It said Ticketmaster Resale had already heard considerable objections from Australian promoters, but remained intent on developing the business.

“We said [to O’Connor], ‘You are our agent, we don’t want you to do it.’ And she said, ‘Everyone else is doing it,’” Echave says.

Promoters wanted Ticketmaster to authenticate resale tickets, but it said it could not verify non-Ticketmaster tickets, nor ask for any form of evidence of authenticity. It argued that, in some instances, the fact people were prepared to pay such high prices for resale tickets could suggest promoters were undercharging for their shows.

Alexander said the Ticketmaster representatives had an “arrogant attitude” and Magan ended up banging the table in frustration. “I’ve never seen him get so wound up, so frustrated was he by the disregard for his point of view and seniority in the industry.”

Echave says at US alt-pop duo Twenty Øne Piløts’ New Zealand show last year, tickets were available on Ticketmaster Resale before they were listed on the main site. He was told they were from pre-sales by the venue.

He says promoters are held at arm’s length from the ticketing process when tickets go on sale, making it impossible for them to check their authenticity. “People have this misconception that the business we are in is like printing money, and in the 1970s and 80s, I’ll be honest with you, it was. Things were different. Promoters printed the tickets and if it was the only show at Western Springs for the year, people would line up and get their ticket from a toilet in Victoria Park if they wanted to go. On the morning of ZZ Top’s show, we sold 8000 tickets at the box office – those days are gone.”

Frontier Touring’s Brent Eccles says because the ticketing contract is between the venue and the ticket seller, overpriced tickets and counterfeits are a problem promoters can’t solve. “We are raising the issue of resale to protect the public, because they are getting ripped off, the artists are getting ripped off and so are we.” He’s urging Ticketmaster here to follow its UK firm and shut down its resale site and believes it will eventually succumb to public pressure.

Door checks

At Lorde’s sold-out New Zealand shows promoted by Frontier last November, staff made random door checks on tickets to compare the names of people who had the tickets with those on the credit card that bought them. “There are lots of things like that, but it’s just an extra cost,” Eccles says. “Yes, there are measures you can take, but it impacts on the punter. It’s the punter who’s going to be held up at the door and asked to prove why the credit card they bought it on is not the name on the tickets. We don’t want that. We want to deal with the people who are making money out of these shows who shouldn’t be.”

In 2016, Echave complained to the Commerce Commission that event promoters couldn’t sell tickets to their own events because of the exclusive deal between the venues and ticketers, and that this was affecting competition. But the commission declined to take further action, saying it was unlikely any law had been broken. It said venues had a choice of at least three main ticket providers – Ticketek, Ticketmaster and TicketDirect – and they had options if they were dissatisfied. “It does not appear to us that an exclusive arrangement between a venue and a ticket provider would have the purpose or likely effect of substantially lessening competition in a market for ticket sales.” But the promoters insist consumers should have a choice of ticketer for each show, saying this would lessen the chances of being ripped off.

Alexander says the only way to shut down scalping is to ban ticket resales, but that would be unfair on people who couldn’t make a gig for genuine reasons. “If you buy a ticket, you understand that, if you can’t go, it’s your problem. When you buy tickets from Air New Zealand, you’re fully aware they’re [often] non-refundable and the same thing applies to us; it’s printed on the ticket. If there are genuine reasons why people can’t go, when we get those requests, of course we are not going to be heartless bastards. But it’s not a right.”

She, Eccles and promoter Gray Bartlett outlined their concerns in a conference call with Consumer Affairs Minister Faafoi’s officials on August 1 and felt they were taken seriously. Faafoi told the Listener that after hearing the promoters’ concerns, he met with “one large ticket company” that he wouldn’t name. “It rejected [the promoters’ claims] in some part but we will wait for its responses to understand where it’s coming from. I’m concerned that exorbitant prices are being paid and people are being sold fake tickets. We are investigating what policy options we may have, but I’m not going to rush to judgment. It’s important to make sure we understand the market before we put in place policies to protect consumers.”

The Major Events Management Act  2007 makes it illegal to on-sell tickets to designated international events. It has covered the Rugby World Cup, Cricket World Cup and Gold Coast Commonwealth Games, but it doesn’t apply to big concerts. Faafoi says that law wouldn’t be a suitable tool for concerts, and his officials are closely watching how the new Australian legislation is working and being policed.

Alexander says venues need to take responsibility, along with ticket sellers, for what’s occurring. “Ticket companies became service providers based on making it easier for us to sell and to protect the public. If they want to fulfil that role for us, and we accept that we can’t do anything about it, they can’t do it on an all-care, no- responsibility basis by allowing things to occur that are clearly ripping off the public. Likewise, if the venues want to sign up to these exclusive agreements, and they are getting paid for it [with a share of the ticket price], they need to say, ‘I am taking responsibility’ as well.”

Ticketers pay venues a share of the price, the “inside charge” they receive for selling the tickets. Promoters are in the dark about how much that is, but say it could be $2-$4 a ticket, depending on the show.

Magan says the deals are confidential and part of a “secret society” of the venues and ticketers. He says the venues know what’s happening to consumers and are complicit, but won’t support promoters’ calls for action. “They know … but the dollar is speaking to them.”

Step right up

Online resales are difficult to police and few practical remedies are available.

Consumer law expert Joe Edwards, a partner at Russell McVeagh, says if the Commerce Commission wins its case against Viagogo in the High Court, it’s difficult to see how any ruling will be enforced. The commission is not taking a prosecution, but is seeking declarations that the Swiss-based company has breached the Fair Trading Act, and an injunction restraining it from further breaches.

In 2011, Edwards was seconded to the International Rugby Board, and part of his role was to try to prevent World Cup ticket scams generated by Norwegian websites. He says overseas sites always present jurisdictional challenges. “The Commerce Commission and Ministry of Business, Innovation and Employment did everything they could to prevent it from a practical perspective, but it’s very difficult to stop an overseas-based company from selling things online that arguably breach New Zealand law.”

Asked if Google has any responsibility to stop its algorithms leading consumers to questionable sites, Edwards says its response would be that it could only do so much. “It’s very difficult for the likes of Google to be a sort of online police and determine if a site is legitimate or not based on some consumer complaints, when other customers are receiving the exact product they want, which is resold tickets.”

If websites were advertising tickets as “resales” when they knew they were not, it raised issues under the Fair Trading Act, as the customer was likely to be deceived and pay a premium because the tickets were in demand. “That’s why you’d go to a resale website when you could have bought them off the original site.”

A consumer could take a ticket seller to court, but realistically that wouldn’t happen, so the best option was a complaint to the Commerce Commission. A complaint to the Advertising Standards Authority might lead to a finding in the consumer’s favour, but it offered no redress. A complaint to the Disputes Tribunal incurs a $50 fee.

He believes legislation stopping people reselling tickets would be difficult to police because of the raft of social media avenues available to individuals to dispose of them.

He says the UK Advertising Standards Authority has instructed ticket resale sites, including Viagogo, to be more transparent with fees and charges.

Buying concert tickets?

The Commerce Commission has the following advice:

  1. Make sure you are visiting the official ticket seller’s site, and don’t assume that the first web search result is the official site. This is because some resale sites, such as Viagogo, use ads on Google to appear at the top of the advertised search results.
  2. One way to ensure you have the official site is to visit the artist or event’s official website and follow the links from there.
  3. If the official site has sold out and you buy through a resale site, be aware that tickets can be much more expensive.
  4. Tickets bought through a resale site could also be fake. You might never receive the ticket and it might not have the features you thought you were buying – for example, location in the venue, premium add-ons or wheelchair access.

This article was first published in the September 1, 2018 issue of the New Zealand Listener.


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