Ticket touts: tighter regulation looms. Does this mean higher ticket prices?

Ticket touts: what do you reckon?

'Classic entrepreneurs' at the vanguard of popular capitalism? Or are they the bane of events organisers who tire of seeing their customers 'ripped off'?

Late last year, a poll found that almost three quarters of Britons are in favour of ticket resales.

Even so, this is a tricky area in which to legislate. Is there a difference between (i) reselling a ticket when you can no longer go to a concert, and (ii) buying tickets in bulk to sell them at a lavish mark up outside of the concert hall itself? I can’t help thinking that the latter activity is not as well received by the British public

As a committee of Parliament noted in 2007:

There is no consensus as to whether “touting” means all reselling of tickets, all reselling not authorised by the original issuers, or only the shady or less reputable activities.

Despite these concerns, the Government has decided to regulate this area in the Consumer Rights Bill. This (soon to be enacted) legislation means that people re-selling tickets to music gigs and sports events will be regulated more closely, with those breaching the new laws liable to fines of up to £5,000. What's more, the onus of stopping touting will be shifted onto the venues.

We spoke to Adam Lovatt, legal counsel at IMG, about these reforms. In our interview with him, he considers the practical implication of the new rules and warns that the possibility of fines might result in higher ticket prices for consumers:

https://twitter.com/CMAgovUK/status/575642944071417856

What changes are being made to the current legislation? When will they come into effect?

The legislation—the Consumer Rights Bill—has been passed by Parliament and is awaiting Royal Assent.

The new law seeks to try and create more transparency from the likes of Viagogo or Stubhub who re-sell tickets at a high price. It is likely that the secondary ticket suppliers will find the new provisions rather controversial but most have promised to abide by them.

The new law should be in force before the general election in May 2015 but will not have retrospective effect.

What is it intended to achieve and how successful might it likely be?

The aim is to make sure that the public, if they want to buy tickets, can do so with more comfort than is currently in place. The idea is to introduce transparency in order that the public understand who they are buying tickets from.

It is important to understand it is not just the websites such as Viagogo and Stubhub who take advantage of the secondary tickets market, individuals do so as well. For example, football fans who have season tickets at clubs, might sell their tickets when they cannot make it to a match and make a profit from such a sale.

My view is that the touts and websites may regard the proposed fine as nothing more than a business expense. Secondary ticket outlets will always find a way around it. The so called infringing websites have however advised that they will now advise the following to the public when advertising tickets for sale:

  1. the original cost of any ticket
  2. whether there are entry restrictions and restricted views
  3. whether multiple bookings refer to seats that are next to each other
  4. what additional charges are involved, and
  5. a contact email address if things go wrong

It was interesting at the 2014 Ryder Cup at Gleneagles where fans purchasing tickets had to send in a passport photograph as part of the ticket application form, therefore damaging the potential of the secondary sales market. I think the idea of having a photograph on the ticket was great and seemed to prevent touting at such a high profile event and could be rolled out at future events, causing more damage to the secondary sites than the new legislation could ever do.

What are the available sanctions for those breaching the new rules?

A £5,000 fine can be imposed against those found to be in breach of the new law.

Could there be any unintended consequences? Will the changes undermine a competitive free market, or are these concerns unfounded?

If organisations are going to receive a £5,000 fine, then ticket prices might well go up on the secondary market to cover this cost.

Ultimately those organisations selling tickets might increase the price of tickets to anticipate the possibility of a fine being imposed against them. People are always willing to pay for tickets, at however much is being asked for them. It was reported in the press last week that Benedict Cumberbatch is starring as Hamlet at the Barbican and one seat was being sold at £560 plus a booking fee of £100. The mark-up being made on tickets is enormous.

The debate about ticket touts is similar to the debate about payday loan companies. They are both painted as the baddies, however, ultimately, there is demand for both services. People will always want to go to gigs or sporting events. This might be an unpopular argument but people want to have the ability to go to these third-party sites to buy the ‘once in a lifetime’ ticket and by restricting the sites you are preventing the public from being able to do that. If the demand is there and people are willing to pay, do we need to prevent that happening?

What should lawyers advising in this area of law do now?

The public needs to be cautious as to who they buy the tickets from as it is very easy to get ripped off by secondary ticket sellers and lawyers will seek to ensure that individuals are not being taken advantage of by the third-party sites. If you are going to make any purchase from a third-party website always make sure that the website is authentic as it is often difficult, if not impossible to recover money from unauthenticated ticket touts.

The public are willing to pay more and more for tickets and sites are aware of this. Lawyers for the secondary ticket sites will also be keen to ensure that sites are complying with the new laws and that they avoid fines wherever possible. The terms and conditions contained on any website will have to be re-drafted in great detail, to ensure compliance with the new law.

So what do you think? Do let us have your thoughts below.

Interviewed by Jon Robins. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor. First published on Lexis®PSL Commercial. Click here for a free one week trial.

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