FTC

The Federal Trade Commission is being urged to investigate technology companies that create tools for ticket scalpers that violate existing laws and drive up the price of concert tickets.  
The warning and call to action comes by way of a letter signed by National Independent Talent Organizations president Jack Randall and executive director Nathaniel Marro, taking aim at the World Ticket Summit. Held in Nashville earlier this month, the annual conference is organized by the National Association of Ticket Brokers, the country’s largest member organization for professional ticket resellers and individuals who list and resell tickets on sites like StubHub and SeatGeek. 

At this year’s summit, members of NITO – which represent independent talent agencies and management companies including Arrival Artists, High Road Touring, Paladin Artists, Q Prime, Red Light Management and TKO – “observed a sold-out exhibition hall filled with vendors selling and marketing products designed to bypass security measures for ticket purchases, in direct violation of the BOTS Act,” a Sept. 9 letter to Federal Trade Commission chair Lina Khan reads. 

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That technology includes web browser extensions that set up multiple tabs masking a user’s IP address, proxy services that allow users to be logged in to multiple ticketing accounts from one location and virtual credit card services that bypass geographical restrictions on ticket sales, which are often put in place by event organizers to ensure fair access for local fans. 

According to the letter, the use of this type of technology to procure concert tickets is a violation of the Better Online Ticket Sales (BOTS) Act of 2016 which prohibits scalpers from using technology that circumvents “a security measure, access control system, or other technological measure used to enforce ticket purchasing limits for events with over 200 attendees.” 

Put more simply, most ticketing companies place a cap on how many tickets a fan can buy for a concert and the use of automated bots, proxy servers, VPNs and phantom credit cards to exceed purchase limits is a violation of the BOTS Act. 

“The presence of these vendors at a conference specifically for ticket brokers strongly suggests that a substantial portion of attendees either currently use these services or are likely to do so in the near future,” the letter reads. “This widespread availability and apparent demand for tools that can circumvent ticket purchasing limits indicates that many, if not most, scalpers are operating in violation of the federal BOTS Act.” 

The NATB’s executive director Gary Adler issued a lengthy statement in response to NITO’s letter, writing “The vast majority of technology exhibitors at the conference were inventory management systems that help ticket companies organize their tickets, offer them for resale, and help with pricing.” 

“There are many friction points in ticketing,” Adler continued “and high-tech ways that players in the system try to monopolize every dollar spent on ticketing and to prevent the resale of tickets. For more than half of events there are lower cost options on the secondary market and some in the primary market don’t like seeing their previously sold tickets being offered for resale at deep discounts. Artists, venues, and primary ticketers abuse technology every day to create fake scarcity and deceive consumers into paying higher prices when really, they are secretly holding back tickets to slowly drip more on sale over time to cheat and fool the fan. This is most likely an illegal deceptive marketing and advertising practice, driven by artists, venues, and primary ticketing companies, that the FTC should immediately investigate.” 

Adler notes that the NATB “advocated for the passage of the BOTS Act in 2016 as we fully support the banning of bots. There is no place in the system for illegal bot use. We stand for doing resale the right way and passing strong laws to protect fans and competition across the ticketing industry. If any exhibitors were offering technology that violates the BOTS Act, we want to know as they will not be welcomed back.”   

Since its passage in 2017, the BOTs Act has only been enforced one time, in 2021, when three New York-based ticket brokers were charged with violating the law. The government’s enforcement of the BOTS Act has been an “abysmal failure” writes songwriter and music industry analyst Chris Castle, noting that StubHub’s scheduled IPO this fall was a tell-tale sign that the BOTS Act was “under-enforced.” 

“Let’s face it – if there were no bots and no boiler room operations, StubHub probably wouldn’t have much of a business,” Castle wrote. Lawmakers including Sen. Marsha Blackburn (R-Tenn.) have introduced legislation like the Mitigating Automated Internet Networks for (MAIN) Event Ticketing Act of 2023 which would force ticketing companies to be more proactive about reporting BOT usage, but those efforts have largely stalled in Congress. 

NITO’s letter includes eight recommendations for rights holders and the FTC, calling for the regulator to subpoena the customer lists of “companies offering services that fall into the categories likely to facilitate BOTS Act violations” as well as increased enforcement actions, prioritizing “investigations into large-scale ticket reselling operations, focusing on those using multiple technologies to circumvent purchasing limits.” 

By implementing these recommendations, the letter explains, “rights holders and the FTC can take significant steps towards curbing BOTS Act violations and ensuring fairer access to event tickets for consumers.”