Markets Wired

Online resale ticket exchange TicketNetwork, Inc., and two of its marketing partners, Ryadd, Inc. and SecureBoxOffice, LLC, have settled Federal Trade Commission and State of Connecticut allegations that their advertisements and websites misled consumers into thinking they were buying event tickets from the original venue at face value. Instead, the complaint alleges, the defendants’ websites actually were ticket reseller sites with event tickets often priced above the venue’s original price.

Under the terms of the settlements, the defendants are prohibited from deceptively advertising their resale ticket services, and will pay $1.4 million into a Connecticut fund for consumer education and enforcement.

TicketNetwork operates an electronic exchange enabling ticket brokers and other ticket-holders to resell their tickets to consumers on the secondary market. It promotes the sale of these tickets through its own websites and through affiliate marketers and private-label marketing “partners.” The joint complaint alleges that TicketNetwork and two of its top partners, Ryadd and SBO, violated the FTC Act and the Connecticut Unfair Trade Practices Act by misrepresenting that they were the “official” site or “box office” for the actual venue where an event was being held.

“With today’s settlements, the FTC and the Connecticut Attorney General’s office send a strong message to all online ticket sellers that they must clearly disclose who they are and what they are offering,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “These are basic rules of the road for marketers of any product or service, and consumers deserve no less.”

Ryadd, for example, placed the following paid Google ad that appeared at or near the top of the search results page when consumers searched for “radio city music hall”:

Radio City Music Hall/ RadioCity MusicHall-NY.com
radiocity.musichall-ny.com
Official Ticket Source Online for Radio City Music Hall Tickets in NY

The ad conveyed the impression that it was for the official Radio City Music Hall site, according to the complaint. Consumers who clicked on the ad were taken to a website prominently titled “Radio City Music Hall” which featured photos, text, and other material designed to look like the official Radio City Music Hall website. It was actually a Ryadd site, selling resale tickets, often at a price higher than original face value.

SBO allegedly used a similar approach, mimicking actual venues by using the term “box office” in its ads and websites. For example, SBO placed the following paid Google ad that appeared at or near the top of the results page when consumers searched “Providence Performing Arts Center”:

Providence PAC Tickets / pac.providenceboxoffice.com
pac.providenceboxoffice.com
Buy Providence PAC Tickets. Official ProvidenceBoxOffice Site

Consumers who clicked on this ad landed on a website featuring a headline and text designed to look like the official website for the Providence Performing Arts Center, in Providence, Rhode Island, when, in fact, it was an SBO site selling resale tickets, often for more than their face value.

Accordingly, the complaint alleges that Ryadd and SBO routinely misrepresented their resale ticket sites as actual venue sites; failed to adequately disclose that the sites offered tickets for resale and that prices often exceeded the tickets’ face value; and that the websites were neither owned by the venue, sports team, performer, or promoter, nor authorized to sell tickets on their behalf.

The complaint further alleges that TicketNetwork participated in Ryadd’s and SBO’s misleading marketing. Ticket Network allegedly helped create the deceptive portions of certain ads, provided legal cover through inadequate disclosures, and helped to maintain the deception by defusing complaints and bad publicity, among other means. The complaint states that TicketNetwork knowingly profited from Ryadd’s and SBO’s deceptive practices.

The complaint also names Charles A. Lineberry and Ryan J. Bagley, who are officers of Ryadd, Inc., and James P. Moran, who is the owner and manager of SBO, as defendants.

Under the three proposed settlements:

• All of the defendants are prohibited from misrepresenting, directly or by implication, that a resale ticket site is a venue site or is offering tickets at face value;
• The defendants are prohibited from using the word “official” in any ad, URL, website, or other advertising for resale tickets, except in very narrow circumstances;
• The defendants must affirmatively disclose that: their websites are resale marketplaces and not venues or box offices; the ticket price may exceed the ticket’s face value; and the website is not owned by the venue, sports team, performer, or promoter;
• TicketNetwork must require all partners to sign written contracts promising to adhere to the order, and must take disciplinary action when partners violate the order and appropriately handle consumer complaints about venue confusion; and
• The three defendants will pay a total of $1.4 million to the state of Connecticut, with $750,000 coming from Ticket Network, $550,000 from Ryadd, and $100,000 from SBO.

The Commission vote authorizing the staff to file the complaint and approving the three proposed settlement orders was 5-0. The FTC filed the complaint and the proposed orders in the U.S. District Court for the District of Connecticut on July 24, 2014. They are subject to court approval.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. Settlement orders have the force of law when approved and signed by the district court judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.