New York’s top lawyer, two ticket sellers sue each other

While the CBC and Toronto Star are doing their tremendous work looking into shady dealings at Ticketmaster, the New York attorney general is in the middle of a fight with ticket resellers herself.

Ticket Galaxy and TicketNetwork, two Connecticut-based companies, sued Attorney General Barbara Underwood for something her predecessor, Eric Schneiderman, started more than two years ago.

Schneiderman went after ticket resellers and scalpers, suing and winning several cases by showing how they ripped off concert-goers, sports fans and theater lovers.

Ticket Galaxy and TicketNetwork say those lawsuits, and new federal and state-level laws, are keeping them from conducting their business, which they claim is fully above board and legal, Reuters reports.

Ticket Galaxy, a reseller, and TicketNetwork, an online marketplace for those resellers, say in their separate but related lawsuits that “it is entirely normal for companies to sell tickets they expect to eventually receive, a practice known as ‘drop shipping,’ and for such transaction to be handled online.”

They didn’t pay the fees levied against them by Schneiderman and sought by Underwood and she vowed to sue them. The ticket companies filed first, saying viewing their businesses as fraudulent could “reduce competition and boost prices and disrupt the online models of companies such as Amazon.com Inc and eBay Inc, as well as businesses that engage in drop shipping regularly,” Reuters reports.

A few days after TicketNetwork and Ticket Galaxy filed their lawsuit, Underwood filed hers, a 44-page suit, claiming the companies are “conducting a massive scheme to trick tens of thousands of unsuspecting fans into buying tickets to concerts, shows and other live events that the sellers did not actually have,” the AG’s office says.

For any concert goer who has looked on StubHub before a major tour has gone on sale and see a variety of tickets up for grabs and wondered how that was possible, it’s this exact practice of speculative tickets.

Brokers have people buying tickets for them as soon as general public availability becomes available. Even more have other arrangements to buy presale tickets, credit card presale offers, etc., so they offer tickets on their sites before they’re available because they know they’re going to BE available. In an interview two years ago, a StubHub representative told this blog this practice was common and usual and allowed them to post tickets for sale because they wouldn’t actually complete and authorize a transaction until and unless tickets were confirmed and in (digital) hand.

“Speculative tickets like these are nothing more than a scam that hurts New Yorkers and undermines the entire ticket industry – driving up prices while defrauding consumers into believing that they’re buying a real ticket,” Underwood said. “New Yorkers should not have to – unknowingly – bet on whether a seller can actually deliver the tickets for which they paid. This office will continue to do what’s necessary to protect New York fans.”

According to Underwood’s lawsuit, Ticket Galaxy, TicketNetwork and other sellers have offered for sale speculative tickets thousands of times – 96,000 orders between January 2012 and April 2018, of which more than 30,000 were purchased through Ticket Galaxy.

Before tickets officially go on sale, customers are scrolling through these speculative sale sites, thinking these seats will be available. This, combined with tickets selling out quickly when they become available for real, causes demand to go up and, in return, drives up the cost of tickets, real or speculative, “often hundreds or thousands of dollars above face value,” Underwood says.

In particular, in December 2015, TicketNetwork was selling tickets for Bruce Springsteen concerts in New York for between $2,100 to $3,600 apiece, all before the tour was even on sale to the general public.

TicketNetwork reportedly says it is protected by the federal Communications Decency Act of 1996, which states that providers of online services can’t be held accountable for the action of its independent members, buyers and sellers, the Journal Inquirer reported. The company also argues that there’s no legal precedent for what Underwood, and Schneiderman before her, was attempting to do.  

There is one thing to keep in mind with these lawsuits: Underwood is the attorney general for New York until the end of this year. She’s not running for the position, which is up for election in November. While it might be a good bet that the person filling the AG’s office chair come January will follow in the footsteps of his or her predecessors, the odds are decreased should a Republican win the office.

In other words: This case could continue into next year or it could be moot.

Either way, the treatment of customers and ticket buyers by sellers, retailers, brokers and others on the other side of the business will remain contentious for a long, long time.

UPDATE: Some US senators want to have a word with both Ticketmaster and its parent company, Live Nation. You new this was gonna happen, right?