Class action lawsuits in Canada and the U.S. are in the works against Ticketmaster — the world’s largest ticket seller, with a virtual monopoly on major events across North America — following a Toronto Star/CBC investigation that revealed new details about the company’s selling techniques.
Regina-based class action firm Merchant Law Group LLP, which already has a class action filed against Ticketmaster alleging inflated ticket prices, has confirmed it intends to expand that claim to include Star/CBC reporting, captured on hidden cameras, that Ticketmaster actively recruits scalpers to resell its tickets through its TradeDesk “professional reseller program.”
“It’s a result of the Star/CBC investigation that got us looking at whether we can advance a claim successfully for breach of competition and consumer affairs legislation,” said firm principal Tony Merchant. “We knew about the issues of scalpers. But we did not know there was evidence available of them working conjunctively with scalpers. Getting those things on camera are things a court will listen to … You’ve sent us back to the drawing board. ”
Total damages against the company could top $100 million, Merchant said in an interview Saturday.
In the U.S., law firm Hagens Berman has posted on its website an open invitation — under the headline “Ticketmaster’s TradeDesk Scalping Scheme” — to anyone who has purchased inflated Ticketmaster seats to sign up.
“Reports indicate that Ticketmaster accepts kickbacks by secretly facilitating ticket sales through scalpers at a higher cost, collecting profits from both the original and secondary sales of tickets,” the online posting reads. “Ticketmaster has actually facilitated the sale of tickets to the secondary market in order to receive a second cut on each ticket — one that is even more than the cut Ticketmaster received on the original ticket sale.”
Ticketmaster did not immediately respond to questions about the lawsuits Saturday.
After reading the Star/CBC stories, Torontonian Lyne McMurchie signed on to the class action on the Merchant Law website, still smarting from her experience with Ticketmaster earlier this year.
On May 7, McMurchie and her husband went to Ticketmaster’s website the minute tickets went on sale for a show by Korean pop band BTS in Hamilton. They clicked furiously, trying to find seats for their 15-year-old daughter, a “super-fan.”
“I’d click on an open seat and it would turn and turn and then tell you someone else got that seat.” McMurchie said. “After 25 minutes, panic sets in and you get scared you’re not going to get anything.”
When they finally landed two available seats priced at $1,173 apiece, they begrudgingly ponied up.
“In that moment, it felt like do or die. So we did it.”
McMurchie has since gone back to Ticketmaster.com and found comparable tickets for the concert, taking place this weekend, available for less than half the price they paid.
“I don’t understand the system. But I feel like I’ve been ripped off because those seats aren’t far from the ones we got,” she said.
And because the band’s fans are overwhelmingly teenagers who need adult accompaniment, families are forced to pay twice the inflated seat price, she added.
“I think they really know how to take advantage of the parent dynamic with teenagers … Knowing now what Ticketmaster seems to be doing behind the scenes, it certainly gives me pause for thought.”
The Star/CBC investigation showed ticket selling techniques, including “dynamic pricing” of seats for a Bruno Mars show in Toronto, in which the price for individual seats varied dramatically during the sale period; the “hold-back” of seats listed for sale to drive up demand; and the company’s courtship of international scalpers — once described by company officials as “pirates” — as “partners” in the lucrative resale market.
Star and CBC reporters working undercover and posing as scalpers were told by two Ticketmaster employees on two different occasions that scalpers who use the company’s TradeDesk software will not be scrutinized, even if they have far more tickets than the posted limit allows.
In Las Vegas, a Ticketmaster sales executive told reporters that the company turns a blind eye to TradeDesk clients who hold massive inventories and multiple Ticketmaster.com accounts in breach of the company’s purchasing limits of typically six to eight seats per show.
Ticketmaster officials did not answer detailed questions about TradeDesk and the sales pitches in the weeks before publication and instead sent a brief general statement.
On Thursday, a day after publication of the Star/CBC story, the company announced that it has launched an internal review of its ticket reseller accounts and employee practices to ensure that scalpers who use bots to circumvent purchase limits aren’t using Ticketmaster’s resale software. It also said the company does not condone the statements made by its employee “as the conduct described clearly violates our terms of service.”
Richard Powers, an associate professor at the University of Toronto’s Rotman School of Management, said the company’s response makes clear “the cat is out of the bag.”
“I think it is a bit ingenuous to think that Ticketmaster brass were unaware of these practices taking place,” he said. “While acknowledging that the practices violate their own Seller Code of Conduct, and specifically denouncing the statements made by their own employee, they do not indicate anywhere that the practices were not taking place. Which leads to one conclusion — they were.”
Reg Walker, a security consultant and expert on ticket scalping in the U.K., called Ticketmaster’s response “nonsense.”
“How on earth do they think scalpers acquire tickets in such large numbers? Are they suggesting they all went to Hogwarts and learned how to magic them out of thin air? The point is no one ever asks the scalpers how or where they obtained the tickets as they already know the answer. The lack of due diligence is appalling and demonstrates a singular contempt for genuine music and sports fans who are unable to obtain tickets at face value due to industrial ticket harvesting by scalpers.”
If Ticketmaster executives really didn’t know these practices were happening, “the directors are clearly not in control of the business,” Walker said. “And if they did know, are they fit and proper persons to be directors?”
Merchant Law first filed a class action against Ticketmaster in January, alleging Ticketmaster and its parent company, Live Nation, employ so-called “drip pricing” — a technique in which an initial advertised price is inflated with added fees, taxes and charges — to “jack up” the face price of tickets.
That class action has not been certified. Merchant said an amended statement of claim will be added within a week that addresses the Star/CBC findings.
Walker, Merchant and Powers all said governments have a strong role to play in protecting consumers from ticket price gouging.
“The (federal Competition Bureau) has power to demand documents and investigate that Merchant Law doesn’t have and the Toronto Star doesn’t have. You’ve brought all of this information and shone the light. But the courts aren’t as effective a way to address this as the Competition Bureau.”
In January, the Competition Bureau sued Ticketmaster and Live Nation over allegations that they “employ deceptive marketing practices” — including the practice of “drip pricing” — that can inflate the face price of a seat by more than 60 per cent.
Robert Cribb is a Toronto-based investigative reporter. Follow him on Twitter: @thecribby
Marco Chown Oved is a Toronto-based investigative reporter. Follow him on Twitter: @marcooved