Viagogo’s misleading tactics dissected by the High Court
Masterminded in the United States, and incorporated in Switzerland, ticket “resale” marketplace Viagogo enabled ticket-scalpers from all over the world to target New Zealand ticket-buyers.
But a judgment from the High Court in Auckland has laid bare the tactics Viagogo used to drive sales, and induce ticket-buyers to pay inflated prices for tickets.
Many of those tactics, which Viagogo said in 2020 it had ceased using, breached the Fair Trading Act because they were likely to mislead people looking to buy tickets to events like concerts and sporting events, Justice Mary Peters has ruled.
More than 320,000 tickets to concerts and sporting events were sold through Viagogo to New Zealand-based buyers between July 18, 2016 and October 31, 2022, evidence in the civil case brought by the Commerce Commission showed.
But rather than being an “official” ticketing website for events, or a service allowing people to sell unwanted tickets for events they could no longer get to, Viagogo was operating primarily as a service for professional scalpers all over the world selling marked-up tickets to New Zealanders.
In her judgment, dated March 28, Justice Peters said 90% of the tickets resold through the Viagogo website were sold by professional ticket-scalpers who had bought tickets to resell for a profit.
“The seller of tickets to the matinee performance of the Nutcracker Suite at the Napier Municipal Theatre at Christmas may well be based in Uzbekistan,” Peters said.
Only, some of the tactics Viagogo used to present itself, and the tickets that were for sale on its website, were likely to obscure that, Peters found.
After more than 700 complaints from members of the public, the commission launched its case alleging five tactics used by Viagogo it believed were likely to mislead consumers, though anger at Viagogo was more widespread.
The court heard evidence of approximately 9600 “complaints” made to Viagogo by New Zealand ticketbuyers, however none of the complainants was called to give evidence in the month-long trial last year, leading Viagogo to claim their complaints were “hearsay” and not admissible.
Viagogo made changes to its operations in 2019 and 2020 following the commission beginning legal action, but Viagogo denied its now “historic” behaviour breached the Fair Trading Act.
Peters, however, found the commission had proved breaches in all five, though the commission said Viagogo intended to appeal.
The first was that its advertising had been likely to mislead ticket-buyers into thinking it was an “official” ticket agent for events, and not a marketplace on which people sought to resell tickets for profit.
The second was that it had claimed falsely that “All tickets are 100% guaranteed”, when people were sometimes being sold tickets that did not gain them entry to events.
The third was that it had claimed tickets for events were scarce when it had no information on how many tickets were still available from official ticket sellers.
The fourth was that it had misled ticket-buyers by only revealing the large fees it would charge them on top of the ticket prices when they went to pay, instead of during the early stages of their ticket selection.
The fifth was that it had not been clear enough that it was not an “official” seller of tickets for events, but a marketplace where ticket scalpers resold tickets for events.
The commission scored a partial victory in a sixth complaint; that it was unfair for Viagogo to tell unhappy ticket-buyers that they could only sue them through the Swiss courts, while it reserved the right to sue buyers either in Switzerland, or New Zealand.
The true number of people who felt aggrieved with Viagogo may have been much higher, evidence by one expert witness suggested.
Professor Robert Slonim, an expert in behavioural economics, told the court as few as one in 26, approximately 4%, of dissatisfied customers would complain.
Of the 9600 complaints to Viagogo, Peters found 1376 included references to Viagogo’s late revealing of its fees, which were substantial, generally inflating the price paid by ticket-buyers by around 30%.
“By way of example, a ticket to a Lorde concert shown at the initial price of $177.26 incurred total Viagogo fees of $51.72. This brought the total cost of purchasing the ticket to $228.98, a 29% increase from the initial price,” Peters said.
“A ticket to an All Blacks match shown at the initial price of $342.63 incurred viagogo fees of $102.28, bringing the total cost of purchasing the ticket to $444.91, a 30% increase from the initial price.”
More than half complained about Viagogo’s guarantee, while just over 1800 did not realise Viagogo was a resale marketplace.
Peters’ judgment also gave insights how little information people buying tickets through Viagogo were given, and how Viagogo’s processes did not prevent scalpers from misrepresenting the tickets they were reselling.
Viagogo had rules that required ticket resellers to meet basic standards, such as actually having the tickets they were offering for sale, and to identify features of the tickets such as whether they are children’s tickets, but Peters said: “Viagogo accepts that sellers list tickets in breach of these requirements.”
And Viagogo kept certain information from buyers.
“The consumer is not able to see the ticket prior to purchase, and does not know its face value, the identity of the seller, whether they are a broker, or where they are located,” Peters said.
“Nor does the consumer know the seller’s ‘breakage rate’, a term that refers to how many tickets they have sold that have not been delivered to buyers, or were tickets not matching description, or were tickets they had no right to sell, and were ‘refused at gate’ with people turning up at events only to be told the ticket was not valid.
“This information is known to viagogo, but not disclosed,” Peters said.
Peters also found that Viagogo sought to create a sense of urgency in people considering buying tickets by claiming that there were only small numbers of tickets left for events. It used emotive statements like “LAST CHANCE”, and “about to sell out”.
However, Peters found Viagogo had no idea how many tickets were still being sold by the official ticket sellers for the events, so the scarcity claims were misleading.
It was only in September 2019 that Viagogo changed the wording on its scarcity claims to indicate they only covered tickets for resale on Viagogo, however, it only did so in a “faint, less prominent font” than the scarcity claims.
Evidence on how misleading Viagogo’s scarcity claims could be was shown in evidence.
“Viagogo represented that only 97 tickets were left for a Michael Bolton concert, being only 5% of tickets left for the venue, and that tickets were about to sell out. In fact, at the time those representations were made, there were at least 507 tickets available to that concert from an authorised ticketing agent, representing over 25% of the venue’s capacity,” Peters said.
The commission’s action was aimed at holding a global business to account for misleading behaviour in New Zealand, the commission said.