Source: US State of New York
News from the New York Attorney General’s Office
FOR IMMEDIATE RELEASE
September 14, 2018
Attorney General’s Office Press Office / 212-416-8060
A.G. UNDERWOOD SUES OPERATOR OF ONLINE TICKET RESALE PLATFORM, TICKET BROKER OVER MASSIVE SCHEME TO SELL NON-EXISTENT, “SPECULATIVE” TICKETS
TicketNetwork and Ticket Galaxy Allegedly Tricked Tens of Thousands of New York Consumers into Purchasing Non-Existent Tickets That Looked Real, Often at Hugely Inflated Prices
NY Consumers Unknowingly Placed Over 96,000 Orders through these Speculative Ticket Programs between 2012 and 2018
NEW YORK – Attorney General Barbara D. Underwood today filed a lawsuit against TicketNetwork, Inc., Eventvest, Inc. d/b/a Ticket Galaxy, and the companies’ owner, Donald Vaccaro, for allegedly 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 illegal conduct allegedly at issue centers on undisclosed “speculative tickets” – offers to sell tickets that the ticket seller does not have, has not yet purchased, and does not have a contractual right to obtain. Only after a consumer places an order for speculative tickets does the listing broker attempt to purchase the real tickets, at a lower price and from a different source, to provide to the buyer. The broker keeps the difference between the price that he paid and the price at which he sold the speculative ticket.
“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,” said Attorney General Underwood. “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.”
The suit alleges that TicketNetwork, the operator of an online marketplace known as a ticket resale platform, orchestrated a deceptive scheme by operating several “speculative ticket” programs. These programs were specifically designed to enable select ticket brokers, like Ticket Galaxy, to offer speculative tickets for sale through the TicketNetwork resale platform, disguised to look like real tickets. Speculative ticket listings on the TicketNetwork platform are, in all relevant ways, indistinguishable from listings for real tickets, and appear to consumers to be offers for tickets that the sellers have already secured and can provide.
The complaint alleges that Ticket Galaxy and dozens of other brokers have offered deceptive speculative ticket listings through TicketNetwork’s speculative ticket programs. Between January 2012 and April 1, 2018, consumers in New York unknowingly placed more than 96,000 orders through these speculative ticket programs, more than 30,000 of which were placed with Ticket Galaxy.
Defendants’ Made Millions through TicketNetwork’s Speculative Ticket Programs
The suit alleges that Ticket Galaxy and other brokers commonly use TicketNetwork’s speculative tickets programs to post ticket listings to popular concerts and other events before tickets to those events have even been released for sale to the public. During this period, when few other tickets are available, the demand for tickets is so great that Ticket Galaxy and other brokers can charge fans enormous premiums – often hundreds or thousands of dollars above face value.
For example, in early December 2015, TicketNetwork’s website allegedly carried speculative ticket listings to several Bruce Springsteen concerts at venues around New York State that ranged in price from $2,100 to $3,600 per ticket, all of which had been posted before tickets were released for sale to the general public.
TicketNetwork charges brokers more to sell speculative tickets through these programs – in some cases two and a half times what the broker would pay to sell similarly priced real tickets on the same program.
Internal TicketNetwork documents obtained during the Attorney General’s investigation show that the company has also allegedly reaped other benefits from the programs. The programs “create the appearance of plentiful inventory on the [TicketNetwork platform] when there are little or no real tickets,” which helps “generate sales that would not otherwise materialize when limited real inventory is available.” They also help “make TicketNetwork a more important marketplace for brokers” by creating added value for brokers.
Defendants Made Other False and Misleading Statements to Conceal Their Scheme – and Knew that Speculative Listings Deceived Consumers
The complaint further alleges that the defendants have made other false and misleading statements to conceal their scheme. For example, Ticket Galaxy employees routinely lied to customers about why the company would not be providing the tickets the customers had purchased, to avoid revealing that the company never had those tickets in the first place.
Employees have allegedly made a variety of false claims, including that Ticket Galaxy could not provide customers with their tickets due to “an issue with our supplier,” a “listing error,” “an error with the system when processing your order,” and because the “supplier did not release the tickets requested.” In all of these cases, Ticket Galaxy never possessed, and was unwilling or unable to purchase, the tickets the company had sold.
The suit also alleges that the defendants know that listings posted through TicketNetwork’s speculative tickets programs are deceptive. At least as early as 2013, TicketNetwork noted that there had been “Customer Service complaints and confusion” from speculative ticket listings and that the speculative ticket listings “appear real to consumer[s]”.
Defendants are frequently contacted by customers who are upset and confused because they did not receive the tickets they had ordered. For example, the complaint alleges that one customer who received tickets in a different section than he had ordered wrote in a June 2016 email to Ticket Galaxy that:
We selected our section because we are going as a group. Now us 4 will be totally separated from the rest . . . And finding all this out less than 24 hours before the event is quite an ordeal for us. Why couldn’t you get our seats? We purchased these the first day the ticket sales were announced. Why did you claim that you had these seat[s] and what right did you have to offer them when you didn’t have them?
The complaint alleges that defendant Vaccaro, the CEO and owner of TicketNetwork and Ticket Galaxy, oversaw the scheme and was fully aware of the consumer deception. In a November 2016 email to Vaccaro, the president of Ticket Galaxy wrote that consumers viewing tickets listed through the speculative tickets programs did not understand that they could receive tickets that did not match the locations specified in the listings. He wrote that “[i]deally, I’d really like to see [TicketNetwork] implement some type of notification to the consumer for category listings . . .”
Fans are Harmed by the Defendants’ Conduct
The complaint alleges that many fans have been harmed by the defendants’ deceptive scheme. Many consumers who unknowingly purchased a speculative ticket paid vastly inflated prices – often times hundreds or thousands of dollars more than face value. In addition, many consumers did not receive the seats that were advertised. In some cases, consumers received no tickets at all.
The complaint alleges that, through the conduct described above, the defendants have violated New York consumer protection laws meant to protect against deceptive acts and practices, false advertising, and bait advertising – including Executive Law § 63(12), and General Business Law §§ 349, 350, and 396.
The case is being handled by Bureau of Internet and Technology Assistant Attorneys General Jordan Adler and Johanna Skrzypczyk, under the supervision of Bureau Chief Kim A. Berger and Deputy Bureau Chief Clark P. Russell. The Bureau of Internet and Technology is overseen by Executive Deputy Attorney General for Economic Justice Manisha M. Sheth.