FTC scrutinises Ticketmaster efforts to stop resale bots

[SAN FRANCISCO] Live Nation’s Ticketmaster is being probed by the US Federal Trade Commission (FTC) over whether it’s done enough to keep bots from illegally reselling tickets on its platform.

The investigation is focused on Ticketmaster’s compliance with a law meant to prevent automated ticket resales, according to sources familiar with the matter. The probe is at an advanced stages and a decision whether to bring a case could be made within weeks, said some of the sources, who asked not to be named discussing a confidential investigation.

A settlement is also possible. If a case were brought and the company lost, Live Nation could be on the hook for billions of US dollars as the law allows potential penalties of US$53,000 per violation.

In a statement, Ticketmaster denied violating the law and said that it would “vigorously defend any such claims”, but would prefer to work with the FTC to improve ticketing industry policies.

The scrutiny began under former FTC chair Lina Khan’s tenure but has gained steam during the Trump administration, said some of the sources.

BOTS Act

The FTC has enforcement authority over online ticket sales under the Better Online Ticket Sales Act, or BOTS Act, which was passed in 2016 to prevent large-scale ticket scalping by banning the use of bots, or automated methods of circumventing per-person ticket limits for popular events. Scalping is when tickets are bought and then resold at a higher price.

The FTC has redoubled its scrutiny of ticket sales under the Trump administration after the White House issued an executive order in March directing the agency to prioritise enforcement of the BOTS Act. The order mandates a report on how agencies are complying by the end of September.

Ticketmaster’s industry dominance has long been targeted by fans, artists, regulators and lawmakers, dating back to the 1990s and a failed attempt by rock band Pearl Jam to bypass the service on a US tour. Frustration with Ticketmaster bubbled over in 2022 when tens of thousands of fans were unable to complete their orders for tickets for Taylor Swift shows.

The bot probe accelerated following The Eras Tour debacle in 2022, said some of the sources. As part of the probe, FTC investigators are looking at whether the company has a financial incentive to allow resellers to circumvent its rules on ticket limits.

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“Ticketmaster has invested more to stop scalpers than the rest of the industry combined,” the company said. “We believe the FTC has a fundamental misunderstanding of Ticketmaster’s policies, and is taking an excessively expansionist view of the BOTS Act.”

Under the FTC’s interpretation of the BOTS Act, anyone with multiple accounts on any ticketing platform could be held liable under the law, Ticketmaster said.

The FTC declined to comment.

Legal woes

An FTC lawsuit over ticket-scalping bots would add to the company’s string of legal woes. The Justice Department and dozens of state attorneys general filed a lawsuit seeking to break up Live Nation and Ticketmaster that is scheduled for trial in March. The department also has an ongoing criminal antitrust probe into whether the company colluded with rivals at the onset of the pandemic over refund policies for cancelled concerts.

Ticketmaster has decried the proliferation of bots and large-scale resale operations on its platform and across the industry. It says it has been a victim of bots and scalpers, and the company blamed the issues around Swift’s tour on a cyberattack that they said overwhelmed its service. In one effort to combat scalpers, Ticketmaster has a feature that prevents marked-up resales and allows fans to resell tickets at face value.

In a sign of the FTC’s focus on automated ticket sales, the agency sued Key Investment Group, a Maryland-based ticket broker, for violating the BOTS Act over ticket purchases to Swift’s Eras Tour, saying that Key used a variety of methods to circumvent Ticketmaster’s rules on ticket limits and that Ticketmaster was aware of those actions.

In a lawsuit Key preemptively filed against the FTC to stave off an enforcement action, Key argued that Ticketmaster had approved and supported its business, and that both companies are in compliance with the law. BLOOMBERG