Washington, D.C.’s attorney general has sued StubHub, accusing it of deceptively hiding mandatory fees and failing to properly explain what they’re for until the end of a burdensome checkout process.
The lawsuit, filed in Superior Court of the District of Columbia, details several ways in which Stubhub allegedly dupes customers. In what’s known as “drip pricing,” the company advertises an artificially low price to entice ticket buyers and prompts them through a series of unnecessary steps while a timer creates a false sense of urgency. By the time customers are asked to pay, they’re faced with a final price substantially higher than the original due to cryptic “fulfillment and service” fees tacked on without proper explanation that makes it impossible to compare costs with other platforms.
The Washington, D.C. attorney general, Brian Schwalb, seeks a court order that would force Stubhub to make changes to its checkout process and disgorgement of over $100 million in profits from hidden fees, as well as damages. He brings claims for violations of D.C. consumer protection laws.
The lawsuit alleges StubHub intentionally designed the “drip pricing” scheme to increase profits. For one year in 2014, the company utilized a more transparent “all-in” pricing model, which advertised prices that included mandatory fees. A testing period that randomly assigned buyers to one of the two models demonstrated that they’re more likely to purchase tickets — and at higher prices — if fees are hidden until the end of the checkout process.
In one example detailed in the lawsuit, StubHub advertised two tickets for $356, but mandatory fees increased the price nearly 40 percent to $497.
StubHub also misrepresents the purpose of those fees while concealing what they’re for, according to the complaint. What the company calls as “fulfillment and service” fees are unrelated to either of the identifiers and are actually influenced by supply and demand, the lawsuit alleges.
“Furthermore, the fees vary wildly, and StubHub never discloses to the customers how those fees are calculated or what services these fees fund,” states the complaint, which notes that they total upwards of 40 percent of the advertised ticket price.
And while StubHub purports to provide users with a more transparent estimate of the total price with an option to view the price of tickets with fees attached, it’s hidden under multiple drop-down menus that users are unlikely to find, according to the complaint. This option still didn’t include all mandatory fees until March, after the D.C. attorney general reached out to the company expressing concerns about the pricing tactics.
“For years, StubHub has illegally deceived District consumers through its convoluted junk fee scheme,” Schwalb said in a statement. He stressed that D.C. residents have been disproportionately impacted by Stubhub’s alleged misconduct since they spend more per capita on live entertainment than most major U.S. cities, including New York, Los Angeles and Miami. Since 2015, when it adopted the drip pricing model, StubHub has sold roughly five million tickets to consumers in the region for a return of an estimated $118 million in hidden fees, he said.
The lawsuit was filed amid increasing scrutiny of online ticket exchanges and resale platforms. In May, the Justice Department sued Live Nation for antitrust violations tied to its dominance over the live events industry. The government hopes to reduce ticket prices and fees by breaking up the company and Ticketmaster after competition enforcers passed on trying to block their 2010 merger. It could drastically slash the company’s sprawling footprint across all avenues of the industry.
In a statement, National Consumers League CEO Sally Greenberg said, “Hidden fees in the ticketing industry have truly gotten out of control.”
