‘If You Can’t Beat ‘Em, Join ‘Em’: Ticketmaster, Live Nation Hit with Lawsuit Over Alleged Ticket Resale Scheme

Ticketmaster L.L.C. and Live Nation Entertainment, Inc. are in more hot water today, as the companies face a new proposed class action over an alleged ticket resale scheme recently brought to light by Canadian broadcaster CBC. Filed in California district court, the 18-page complaint alleges outright that Ticketmaster, despite its public stance on the issue, has no desire to rid the market of scalpers who buy mass quantities of tickets to be resold at much higher prices.

In fact, according to the lawsuit, Ticketmaster, through its “Resale Partner Program,” may have been propping up scalpers’ operations all along—and getting kickbacks in return. From the complaint:

Ticketmaster has actually facilitated the sale of tickets to the secondary market by secretly implementing a ‘Resale Partner Program’ supported by TradeDesk, which Ticketmaster acknowledges it ‘built expressly for professional resellers.’ And Ticketmaster does this in order to receive a second cut on tickets—that is even more than the original cut Ticketmaster receives.”

The filing comes while the ink continues to dry on a settlement stemming from allegations that Ticketmaster failed to disclose to customers the true nature of UPS and order-processing fees.

“If You Can’t Beat ‘Em, Join ‘Em”

The ticket resale market is a $5 billion industry in the United States, the complaint begins, noting that scalpers’ operations have evolved to the extent that it’s standard operating procedure for resellers to use automated “bots” to buy large quantities of event tickets. These tickets, which sometimes appear on resellers' websites only minutes after they initially went on sale, the suit says, are then quickly resold to the public at hyper-inflated prices. While this undercutting may on its surface look like an obvious problem for ticket brokers like the defendants, Ticketmaster, rather than working to snuff the issue out, has allegedly been working with the same scalpers it claims to disavow.

Front and center in the lawsuit is a September 20^th Los Angeles Times piece that effectively blew the lid off Ticketmaster’s latest public relations debacle. According to the report, Canadian broadcaster CBC and the Toronto Star newspaper sent undercover reporters to this year’s Ticket Summit, a ticketing and live entertainment convention held at Caesars Palace in Las Vegas. It was there, the LA Times writes, that Ticketmaster “held a private event for scalpers,” whom the company publicly refers to as “resellers” or “brokers.” From the report:

Posing as scalpers and equipped with hidden cameras, the journalists were pitched on Ticketmaster’s professional reseller program. Company representatives told them Ticketmaster’s resale division turns a blind eye to scalpers who use ticket-buying bots and fake identities to snatch up tickets and then resell them on the site for inflated prices.”

Why would Ticketmaster go through such trouble? As the lawsuit tells it, the fees coupled with tickets purchased on the resale market amount to a fine chunk of change for Ticketmaster.

“For example, if Ticketmaster collects $25.75 on a $209.50 ticket on the initial sale, when the owner posts it for resale for $400 on the site, the company stands to collect an additional $76 on the same ticket,” the LA Times wrote, citing CBC.

The Times adds that it was at this convention that Ticketmaster resale director Casey Klein held a session titled “We appreciate your partnership: More brokers are listing with Ticketmaster than ever before.” This get-together, the complaint states, was closed off to media.

During the session, Klein reportedly brought attendees up to speed on Ticketmaster’s TradeDesk program, “a web-based inventory-management system for scalpers,” that allows resellers to upload large quantities of tickets bought from Ticketmaster’s site to be listed again on the secondary market and quickly resold. The defendants’ TradeDesk app, the case points out, “is closely guarded by Ticketmaster,” and is mentioned nowhere on the ticket retailer’s website. According to the complaint, TradeDesk was kept under lock and key “given the public outrage the program would likely incite.”

“You’re Not Going to Make a Living on Six or Eight Tickets”

While the mere existence of an under-wraps, scalper-friendly web platform run by a company that claims to want to put out a fire it allegedly helped create is egregious enough, the suit goes on to relay another anecdote from the Los Angeles Times concerning one of Ticketmaster’s presenters at the Las Vegas meetup. The lawsuit, again citing the Times, says that one of the presenters, unaware that he was speaking with an undercover reporter, specified that Ticketmaster’s resale division couldn’t care less about whether resellers used automation technology and/or fake identities to sidestep the defendants’ ticket-buying limits.

“If you want to get a good show and the ticket limit is six or eight,” the presenter reportedly said, “you’re not going to make a living on six or eight tickets.”

Despite the existence of a “buyer abuse” department, Ticketmaster simply does not police “blatantly suspicious online activity,” the lawsuit claims. When a Ticketmaster representative at the convention was asked whether the company was concerned about bots scooping up tickets for scalpers, he reportedly stated: “We don’t share reports, we don’t share names, we don’t share account information with the primary site. Period.”

Ticketmaster’s Response

In response to the scandal, Ticketmaster’s senior vice president of communications stated the following:

“As the world’s leading ticketing platform, representing thousands of teams, artists and venues, we believe it is our job to offer a marketplace that provides a safe and fair place for fans to shop, buy and sell tickets in both the primary and secondary markets.”

The case points out, however, that Ticketmaster, on the same coin, acknowledges that its policy for sellers “specifically prohibits resellers from purchasing tickets that exceed the posted ticket limit to an event” and “prohibits the creation of fictitious user accounts” for the purpose of circumventing its ticket-purchasing limits, the complaint says.

Though Ticketmaster has claimed that it is “categorically untrue that [the company] has any program in place to enable resellers” to buy tickets in bulk, the lawsuit argues Ticketmaster has not denied that its resale division is asleep on the job with regard to policing suspicious activity, nor denied that it encourages resellers to “use TradeDesk to unload mass quantities of tickets on the secondary market.”

According to the suit, Ticketmaster has begun an internal review of its professional resellers’ accounts and employee practices, and will “be putting additional measures in place to proactively monitor for this type of inappropriate activity.”

Who’s covered by this lawsuit?

The case looks to cover all end-user purchasers in the United States who bought a secondary-market Ticketmaster ticket from a professional reseller who participated in the defendant’s resale partner program and/or used TradeDesk or a similar application (EventInventory, eimarketplace) operated by Ticketmaster.

Can I join this lawsuit?

As far as class action lawsuits go, you rarely have to do anything to be included. These things take time, so there’s not much to be done other than sit tight for now.

The full lawsuit can be read below.