FTC Investigates Ticketmaster's Fight Against Resale Bots

The FTC Investigates Ticketmaster Over Bot-Driven Ticket Resales

The U.S. Federal Trade Commission (FTC) is currently investigating whether Ticketmaster, a subsidiary of Live Nation Inc., has done enough to prevent bots from illegally reselling tickets on its platform. This probe centers on the company's adherence to the Better Online Ticket Sales Act (BOTS Act), which was enacted in 2016 to combat large-scale ticket scalping by banning the use of automated tools that bypass per-person ticket limits for popular events.

The investigation is at an advanced stage, with some sources suggesting that a decision on whether to bring legal action could be made within weeks. While a settlement remains a possibility, if the FTC proceeds with a case and Ticketmaster loses, the company could face significant financial penalties, as the law allows for fines of up to $53,000 per violation.

In response to the allegations, Ticketmaster has denied any violations of the law and stated it will "vigorously defend any such claims." However, the company expressed a preference for working with the FTC to improve policies within the ticketing industry.

A History of Scrutiny

The scrutiny of Ticketmaster has been ongoing for decades, with fans, artists, regulators, and lawmakers criticizing the company’s dominance since the 1990s. One notable instance occurred when the rock band Pearl Jam attempted to bypass Ticketmaster during a U.S. tour, highlighting long-standing frustrations with the company.

More recently, in 2022, tens of thousands of fans faced difficulties purchasing tickets for Taylor Swift’s shows, sparking widespread outrage. The bot-related issues intensified following the Eras Tour debacle, prompting the FTC to deepen its investigation into whether Ticketmaster has a financial incentive to allow resellers to circumvent its rules on ticket limits.

Ticketmaster has argued that it has invested more in combating scalpers than the rest of the industry combined. It claims the FTC has a "fundamental misunderstanding" of its policies and is taking an overly broad interpretation of the BOTS Act. According to the company, under the FTC’s interpretation, anyone with multiple accounts on any ticketing platform could be held liable under the law.

Legal Challenges and Industry Pressure

An FTC lawsuit over ticket-scalping bots would add to Ticketmaster’s growing list of legal challenges. The Justice Department and dozens of state attorneys general have filed a lawsuit seeking to break up Live Nation and Ticketmaster, with a trial scheduled for March. Additionally, the department is conducting a criminal antitrust probe into whether the company colluded with rivals during the pandemic regarding refund policies for canceled concerts.

Ticketmaster has consistently criticized the proliferation of bots and large-scale resale operations on its platform and across the industry. It claims to be a victim of these practices and blamed the issues around Taylor Swift’s tour on a cyberattack that overwhelmed its service. To combat scalpers, the company has introduced a feature that prevents marked-up resales and allows fans to resell tickets at face value.

Enforcement Actions and Legal Disputes

The FTC’s focus on automated ticket sales has led to enforcement actions against other entities. For example, the agency sued Key Investment Group, a Maryland-based ticket broker, for violating the BOTS Act over ticket purchases for Taylor Swift’s Eras Tour. The FTC alleged that Key used various methods to bypass Ticketmaster’s rules on ticket limits and that the company was aware of these actions.

In response, Key filed a preemptive lawsuit against the FTC, arguing that Ticketmaster had approved and supported its business model and that both companies were in compliance with the law.

Ongoing Concerns and Industry Impact

As the FTC continues to scrutinize Ticketmaster, the broader implications for the ticketing industry remain uncertain. The outcome of this investigation could set a precedent for how online ticket sales are regulated, particularly with regard to the use of bots and automated reselling practices.

With the potential for significant financial penalties and ongoing legal battles, Ticketmaster faces mounting pressure to address concerns about fairness and transparency in ticket distribution. The company’s ability to navigate these challenges while maintaining its position in the market will be closely watched by fans, artists, and regulators alike.