Legal
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The Justice Department sued TikTok on Friday, accusing the company of violating children’s online privacy law and running afoul of a settlement it had reached with another federal agency.
The complaint, filed together with the Federal Trade Commission in a California federal court, comes as the U.S. and the prominent social media company are embroiled in yet another legal battle that will determine if – or how – TikTok will continue to operate in the country.
The latest lawsuit focuses on allegations that TikTok, a trend-setting platform popular among young users, and its China-based parent company ByteDance violated a federal law that requires kid-oriented apps and websites to get parental consent before collecting personal information of children under 13. It also says the companies failed to honor requests from parents who wanted their children’s accounts deleted, and chose not to delete accounts even when the firms knew they belonged to kids under 13.
“This action is necessary to prevent the defendants, who are repeat offenders and operate on a massive scale, from collecting and using young children’s private information without any parental consent or control,” Brian M. Boynton, head of the Justice Department’s Civil Division, said in a statement.
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TikTok said it disagreed with the allegations, “many of which relate to past events and practices that are factually inaccurate or have been addressed.”
“We offer age-appropriate experiences with stringent safeguards, proactively remove suspected underage users and have voluntarily launched features such as default screentime limits, Family Pairing, and additional privacy protections for minors,” the company said in a statement.
The U.S. decided to file the lawsuit following an investigation by the FTC that looked into whether the companies were complying with a previous settlement involving TikTok’s predecessor, Musical.ly.
In 2019, the federal government sued Musical.ly, alleging it violated the Children’s Online Privacy Protection Act, or COPPA, by failing to notify parents about its collection and use of personal information for kids under 13.
That same year, Musical.ly — acquired by ByteDance in 2017 and merged with TikTok — agreed to pay $5.7 million to resolve those allegations. The two companies were also subject to a court order requiring them to comply with COPPA, which the government says hasn’t happened.
In the complaint, the Justice Department and the FTC allege TikTok has knowingly allowed children to create accounts and retained their personal information without notifying their parents. This practice extends to accounts created in “Kids Mode,” a version of TikTok for children under 13. The feature allows users to view videos but bars them from uploading content.
The two agencies allege the information collected included activities on the app and other identifiers used to build user profiles. They also accuse TikTok of sharing the data with other companies – such as Meta’s Facebook and an analytics company called AppsFlyer – to persuade “Kids Mode” users to be on the platform more, a practice TikTok called “re-targeting less active users.”
The complaint says TikTok also allowed children to create accounts without having to provide their age, or obtain parental approval, by using credentials from third-party services. It classified these as “age unknown” accounts, which the agencies say have grown into millions.
After parents discovered some of their children’s accounts and asked for them to be deleted, federal officials said TikTok asked them to go through a convoluted process to deactivate them and frequently did not honor their requests.
Overall, the government said TikTok employed deficient policies that were unable to prevent children’s accounts from proliferating on its app and suggested the company was not taking the issue seriously. In at least some periods since 2019, the complaint said TikTok’s human moderators spent an average of five to seven seconds reviewing accounts flagged as potentially belonging to a child. It also said TikTok and ByteDance have technology they can use to identify and remove children’s accounts, but do not use them for that reason.
The alleged violations have resulted in millions of children under 13 using the regular TikTok app, allowing them to interact with adults and access adult content, the complaint said.
In March, a person with the matter had told the AP the FTC’s investigation was also looking into whether TikTok violated a portion of federal law that prohibits “unfair and deceptive” business practices by denying that individuals in China had access to U.S. user data.
Those allegations were not included in the complaint, which is asking the court to fine the companies and enter a preliminary injunction to prevent future violations.
Other social media companies have also come under fire for how they’ve handled children’s data.
In 2019, Google and YouTube agreed to pay a $170 million fine to settle allegations that the popular video site had illegally collected personal information on children without their parents’ consent.
And last fall, dozens of U.S. states sued Meta Platforms Inc., which owns Facebook and Instagram, for harming young people and contributing to the youth mental health crisis by knowingly and deliberately designing features on Instagram and Facebook that addict children to its platforms. A lawsuit filed by 33 states claims that Meta routinely collects data on children under 13 without their parents’ consent, in violation of COPPA. Nine attorneys general are also filing lawsuits in their respective states, bringing the total number of states taking action to 41 plus Washington, D.C.
This story was originally published by the Associated Press.
The never-ending legal battle between Journey members Jonathan Cain and Neal Schon erupted again this week, with Cain filing a new lawsuit against Schon over claims that his “exorbitant” spending is threatening to cripple the band’s touring operations.
In a complaint made public in Delaware court on Tuesday (July 30), Cain claimed that Schon’s alleged spending — including unilaterally chartering private jets and charging personal expenses to their shared American Express card — has led to a “deadlock” that must be resolved.
“The deadlock between the company’s directors is now interfering with the company’s ability to take even the most basic actions and is causing significant disruptions in the smooth operation of the company,” Cain’s lawyers write, adding that the problems “pose a severe threat of harm to the company and to Journey’s storied history of musical greatness.”
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Legal battles are nothing new for Schon and Cain, the two key remaining members of an iconic rock band that’s still printing money decades after its “Don’t Stop Believin’” heyday.
Back in 2022, Schon sued Cain over allegations that his bandmate had unfairly blocked his access to the Amex account, “interfering” with the band’s activities and delaying payments to crew members and vendors. A few months later, Cain sued him back — claiming he had placed those restrictions on the Amex to stop Schon from “misusing” the company card, including spending $400,000 in a single month.
The new case, filed in Delaware’s Chancery Court, largely rehashes those same disagreements over spending — like Cain claiming that Schon has “spent up to $10,000 per night for hotel rooms for him and his wife” during their most recent tour.
But in technical terms, the new case focuses narrowly on the governance of Freedom 2020 Inc., a Delaware-based corporate entity they created to operate Journey’s touring. Since Cain and Schon each control exactly 50% of the company, the lawsuit says the two have reached an impasse that has spilled into other aspects of the band’s operations, like managing their staffers.
“Petitioner and respondent are deadlocked with regard to issues concerning the hiring and firing of company employees and Band crew members,” Cain’s lawyers write in the lawsuit. “It is common that one director will terminate an employee or crew member, and hours or days later, the other director will rehire that same individual.”
The lawsuit claims the strife between Cain and Schon has also led to other problems, including disagreements about whether to accept an advance from AEG for their most recent tour, the purchase of cancellation insurance and other problems.
“The deadlock between petitioner and respondent has created a toxic internal environment,” Cain’s lawyers write. “Rather than focusing on the band’s performances during a major international tour, the band’s [members and crew] now find themselves caught in the middle of the directors’ disputes, afraid of performing their job responsibilities, and pressured to align with one director or another.”
As a solution, Cain is asking the court to appoint a neutral third director of the company, who will be able to “issue the tie-breaking vote” during disputes over key issues.
In a statement to Billboard, Cain’s attorney Sid Liebesman stressed that his client was not seeking damages and only wanted to to resolve the impasse: “It is expected that the third director will provide resolution to the issues between Jon and Neal,” Liebesman said. “It is Jon’s intent for Journey to continue providing great live music throughout the current tour.”
An attorney who has represented Schon in his previous litigation with Cain did not return a request for comment on Friday (Aug. 2).
Even before Schon and Cain came to blows, members of Journey had been sparring in court for years. Back in 2020, the two men teamed up to file a lawsuit against former drummer Steven Smith and former bassist Ross Valory over the band’s name. And in 2022, former lead singer Steve Perry took legal action to stop Schon and Cain from registering federal trademarks on the names of many of the band’s biggest hits.
Justin Timberlake made a brief appearance via Zoom in a Sag Harbor, NY courtroom on Friday morning (August 2) where a spokesperson for the singer confirmed to Billboard that he entered a not guilty plea in connection with his June arrest for DWI. According to CNN, Timberlake, 43, attended the arraignment virtually and spoke twice […]
French Montana has reached a settlement to end a lawsuit claiming his 2022 song “Blue Chills” features an unlicensed sample, resolving allegations that he’d tentatively agreed to pay for the clip but never actually did so.
Skylar Gudasz’s 2020 song “Femme Fatale” can be heard playing throughout French’s track — and in a lawsuit filed last year, she claimed the rapper’s reps initially offered to pay her for the sample. But she said French (Karim Kharbouch) then dropped “Blue Chills” without ever actually signing that deal.
In court filings on Wednesday (July 31), attorneys for both sides asked a federal judge to dismiss the case. Each side will pay their own costs, attorneys’ fees and expenses, but any of terms of the agreement were not disclosed in court filings.
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Neither side immediately returned requests for comment.
Gudasz claimed in her August 2023 lawsuit she had first been contacted about French using “Femme Fatale” in May 2022 by Deborah Mannis-Gardner, a well-known industry executive who has been called the “queen” of sample clearance. Gudasz said she and her lawyer then negotiated a deal in which she would receive more than $7,000 in upfront fees, an .08% cut on master royalties, and a 50% share of the copyright for French’s new composition.
But a month later, she claims that French, without notice, released the song “prior to finalizing and signing a licensing agreement.” Gudasz says that her lawyer quickly alerted Mannis-Gardner about the problem.
“Oh jeez,” Mannis-Gardner allegedly wrote in a response email, saying she would reach out to French’s attorney about the issue. But Gudasz says the situation was never resolved, claiming Mannis-Gardner “continued to maintain there would be a final agreement, sent emails finalizing the licensing agreement and requested invoices from plaintiff, which plaintiff timely sent … and even sent plaintiff a congratulatory email.”
“Despite repeated promises from defendants …. no signed agreement, fees, royalties, licensing agreements or monies have ever been sent to plaintiff,” Gudasz’s lawyers wrote in the lawsuit.
Gudasz says the aborted negotiations prove that French “knowingly infringed” the earlier song because they show that he was aware that he needed a license but chose to proceed without one. She claims that French even posted comments to Instagram congratulating her and acknowledged her role in “Blue Chills” on an episode of Apple Music’s Rap Life Radio.
In addition to French Montana, the lawsuit also named producer Harry Fraud (real name Rory William Quigley) as a defendant, as well Sony Music Entertainment and several other companies involved in French’s song. Mannis-Gardner was not named as a defendant in the lawsuit and was not accused of any wrongdoing.
Wednesday’s settlement resolves the lawsuit’s allegations against all defendants.
Damon Dash’s one-third stake in Jay-Z’s Roc-A-Fella Records is going up for auction later this month — but a source tells Billboard that the shares might come with some key limitations.
According to federal court filings this week, the United States Marshals Service will auction off Dash’s 33.3% interest in the storied record company to satisfy an $823,000 judgment against him in a lawsuit filed by movie producer Josh Webber over a failed film partnership.
The auction, set for Aug 29 at a Midtown Manhattan hotel, will have a minimum bid of $1.2 million, and prospective bidders will be required to post a $240,000 deposit for the right to take part in the proceedings.
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The sale will be for Dash’s stake in Roc-A-Fella Inc., an entity whose primary assets are the rights to Jay-Z’s iconic debut album Reasonable Doubt. According to an April article by Rolling Stone, the rest of the catalog of music released by Roc-A-Fella, which dissolved as an operational label in 2013, is owned by other entities and isn’t involved.
The owners of the other two-thirds of Roc-A-Fella — label cofounders Jay-Z (Shawn Carter) and Kareem “Biggs” Burke — have already attempted to stop the auction, including making changes to the company’s bylaws and intervening in the lawsuit. But a federal judge rejected such opposition in February.
The chance to own a valuable piece of rap IP will surely draw bidders, but a source with knowledge of the situation tells Billboard that there are important limitations to what is being auctioned off — namely, that they are buying a stake in a company with other members.
“Whomever buys Dame’s stake in Roc-A-Fella will be a minority owner without authority over any decision-making,” the source tells Billboard. “They won’t have the ability to sell the copyright or borrow against the master as all decisions require majority vote.”
The source also cautioned that the clock was ticking on Roc-A-Fella’s rights to Reasonable Doubt: “There’s also an expiration date on the master ownership for the company, which means revenue and the only asset doesn’t have many years left.”
The auction will be coordinated by Webber’s attorney, Chris Brown. He did not immediately return a request for comment on Thursday.
Webber won his judgment back in 2022 after suing Dash for copyright infringement and defamation over their failed partnership on producing a film called Dear Frank. But Dash has yet to hand over the money, hence the court-ordered auction.
The filmmaker isn’t the only one seeking the money from Dash’s Roc-A-Fella stake. The New York City Department of Social Services (NYCDSS) will actually have first dibs, according to court documents, since Dash owes a total of $145,096 in unpaid child support to a woman named Rachel Roy for his two daughters and to a woman named Cindy Morales for his son.
Brown is also seeking to collect another $155,000 that Dash owes to him and another client, photographer Monique Bunn, from separate legal actions. But they’ve agreed that NYCDSS and Webber deserve to recoup their debts from Dash first.
If any money from the auction is left over, it will go to Dash himself. His attorney did not return a request for comment on Thursday.
Back in 2021, attorneys for Jay-Z and Roc-A-Fella sued Dash after news broke that he was planning to auction off a stake in Reasonable Doubt as a non-fungible token (NFT). They argued that the company, not Dash himself, owned the rights to the album: “The bottom line is simple: Dash can’t sell what he doesn’t own.” A year later, Dash signed a settlement in which he agreed that he had no right to sell any part of Jay-Z’s album — as an NFT or otherwise.
Last year, attorneys for Jay-Z, Biggs and Roc-A-Fella mounted a concerted effort to stop the court-ordered sale of Dash’s stake in the company. After jumping into Webber’s lawsuit, they told a federal judge that the auction would violate company bylaws, which they had amended in 2021 to prohibit such a sale.
But in February, the judge overseeing the case said the updated Roc-A-Fella bylaws had been enacted without Dash’s input and were unenforceable. Instead, he offered an alternative route for Jay-Z and Biggs that would still “readily address their concern” with the sale: “They can participate in the auction and place the winning bid.”
The estate of the late rapper Juice WRLD is being sued by a music producer named Joshua Jaramillo, who claims he’s owed royalties from the late rapper’s 2021 collab with Suga of BTS.
In a lawsuit filed Wednesday (July 31) in Los Angeles court, Jaramillo says he served as a producer on “Girl of My Dreams,” a 2021 hit that debuted at No. 29 on the Hot 100, and that he was promised a 5% ownership stake and an additional 1% producer royalty.
But “despite repeated requests by plaintiff,” Jaramillo says the estate has not paid him everything he’s owed.
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“Plaintiff has performed all services under the contract. ‘Girl of My Dreams’ became a nationwide hit,” Jaramillo’s lawyers write. “Defendant has failed to pay plaintiff the full amount of agreed upon royalties.”
The lawsuit, which is short on details, also claims that the estate has refused to provide a legally-required accounting “to verify that all royalties were paid.”
A rep for the estate could not immediately be reached for comment.
Juice WRLD (Jarad Anthony Higgins), a pioneering voice in emo rap and SoundCloud rap, died of a drug overdose in December 2019 while onboard a private jet flying from Los Angeles to Chicago. Citing law enforcement sources, TMZ reported days later that the rapper swallowed a large number of pills to hide them from federal agents who were waiting for the plane to land.
Released as a promotional single for his posthumous 2021 album, Fighting Demons, “Girl of My Dreams” was a collaboration with South Korean rapper Suga and features lyrics in both English and Korean. Though the track spent just a week on the Billboard Hot 100, Fighting Demons was a bigger hit, spending 72 weeks on the Billboard 200 and peaking at No. 2.
The new case is the second time Juice’s estate has been sued over the past year. In October, an artist named PD Beats filed his own lawsuit claiming he’d served as one of the co-writers of the rapper’s 2021 track “Not Enough” but had not been paid his proper royalties.
That case, which also named “Not Enough” producer Dr. Luke (Lukasz Sebastian Gottwald) as a defendant, remains pending.
Trigger warning: the following story contains descriptions of violence against children.
British authorities have charged an unnamed 17-year-old with murder in the mass stabbing rampage at a Taylor Swift-themed danced class in Southport, England on Monday that left three young girls dead and eight other children and two adults injured.
According to BBC News, the teenager — who cannot be named because of his age — was slated to make an initial appearance in Liverpool City Magistrates’ Court on Thursday (August 1) after also being charged with 10 counts of attempted murder and possession of a bladed article. Authorities named the three young girls killed in the incident: Bebe King, 6; Elsie Dot Stancombe, 7; and Alice Dasilva Aguiar, 9 and announced that seven of those injured in the attack are still believed to be in critical condition.
Swift, in the midst of a European run of shows on her Eras Tour, reacted in shock to the attack, posting a note on her Instagram Story on Tuesday morning in which she said, “The horror of yesterday’s attack in Southport is washing over me continuously, and I’m just completely in shock… The loss of life and innocence, and the horrendous trauma inflicted on everyone who was there, the families and first responders. These were just little kids at a dance class. I am at a complete loss for how to ever convey my sympathies to these families.”
Police have said that the 17-year-old suspect from Cardiff was arrested at the community center hosting the dance class and that a knife was seized following the attack in the seaside town in Northwest England near Liverpool. Witnesses described a terrifying scene in which bloodied children ran in terror from the center where the Swift-themed dance and yoga event for children 6-11 was taking place with the promise of “a morning of Taylor Swift-themed yoga, dance and bracelet making.”
According to BBC, when officers arrived on the scene Monday morning they found multiple people, many of them children, suffering from serious injuries following the “ferocious” attack. Police said a person armed with a knife walked into the building and attacked those inside, with two adults suffering critical injuries while bravely trying to protect the children from the alleged assailant.
On Tuesday, far-right protesters fueled by angry and false internet rumors threw bottles and stones at police, wounding 20 officers outside a Northwest England mosque near the spot where the three girls were killed. Prime Minister Keir Starmer condemned what he called “thuggery” and said the angry crowd hijacked what had been a peaceful vigil attended by hundreds in the center of Southport to mourn the dead and seriously wounded.
The violent crowd authorities believe had ties to the far-right group English Defence League, torched a police van and several cars following rumors about the identity of the teenage suspect. The rampage came after an emotional crowd gathered earlier in the evening in Southport outside The Atkinson theater and museum in to hold a minute of silence for the victims.
Mass casualty shootings and killings with firearms are exceptionally rare in Britain following a mass shooting at a primary school in Scotland in 1996 that killed 16 students and a teacher. Following that event, Parliament banned private ownership of most handguns and semi-automatic weapons and since then there have been no school shootings in the U.K., though attacks with blades remain a serious issue.
At press time Swift fans had set up a Swifties for Southport fundraiser for the families of victims that had raised more than $433,000 so far.
AI music firms Suno and Udio are firing back with their first responses to sweeping lawsuits filed by the major record labels, arguing that they were free to use copyrighted songs to train their models and claiming the music industry is abusing intellectual property to crush competition.
In legal filings on Thursday, the two firms admitted to using proprietary materials to create their artificial intelligence, with Suno saying it was “no secret” that the company had ingested “essentially all music files of reasonable quality that are accessible on the open Internet.”
But both companies said that such use was clearly lawful under copyright’s fair use doctrine, which allows for the reuse of existing materials to create new works.
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“What Udio has done — use existing sound recordings as data to mine and analyze for the purpose of identifying patterns in the sounds of various musical styles, all to enable people to make their own new creations — is a quintessential ‘fair use,’” Udio wrote in its filing. “Plaintiffs’ contrary vision is fundamentally inconsistent with the law and its underlying values.”
The filings, lodged by the same law firm (Latham & Watkins) that reps both companies, go beyond the normal “answer” to a lawsuit — typically a sparse document that simply denies each claim. Instead, Suno and Udio went on offense, with extended introductions that attempt to frame the narrative of a looming legal battle that could take years to resolve.
In doing so, they took square aim at the major labels (Universal Music Group, Warner Music Group and Sony Music Entertainment) that filed the case in June — a group that they said “dominates the music industry” and is now abusing copyright law to maintain that power.
“What the major record labels really don’t want is competition,” Suno wrote in its filing. “Where Suno sees musicians, teachers and everyday people using a new tool to create original music, the labels see a threat to their market share.”
Suno and Udio have quickly become two of the most important players in the emerging field of AI-generated music. Udio has already produced what could be considered an AI-generated hit with “BBL Drizzy,” a parody track popularized with a remix by super-producer Metro Boomin and later sampled by Drake himself. And as of May, Suno had raised a total of $125 million in funding to create what Rolling Stone called a “ChatGPT for music.”
In June, the major labels sued both companies, claiming they had infringed copyrighted music on an “unimaginable scale” to train their models. The lawsuits accused the two firms of “trampling the rights of copyright owners” as part of a “mad dash to become the dominant AI music generation service.”
The case followed similar lawsuits filed by book authors, visual artists, newspaper publishers and other creative industries, which collectively pose what could be a trillion-dollar legal question: Is it infringement to use vast troves of proprietary works to build an AI model that spits out new creations? Or is it just a form of legal fair use, transforming all those old works into something entirely new?
In Thursday’s response, Suno and Udio argued unequivocally that it was the latter. They likened their machines to a “human musician” who had played earlier songs to learn the “building blocks of music” — and then used what they had learned to create entirely new works in existing styles.
“Those genres and styles — the recognizable sounds of opera, or jazz, or rap music — are not something that anyone owns,” Suno wrote in its filing. “Our intellectual property laws have always been carefully calibrated to avoid allowing anyone to monopolize a form of artistic expression, whether a sonnet or a pop song.”
The lawsuit from the labels, Suno and Udio say, are thus an abuse of copyright law, aimed at claiming improper ownership over “entire genres of music.” They called the litigation an “attempt to misuse IP rights to shield incumbents from competition and reduce the universe of people who are equipped to create new expression.”
Both filings hint at how Suno and Udio will make their fair use arguments. The two companies say the cases will not really turn on the “inputs” — the millions of songs used to train the models — but rather on the “outputs,” or the new songs that are created. While the labels are claiming that the inputs were illegally copied, the AI firms say the music companies “explicitly disavow” that any output was a copycat.
“That concession will ultimately prove fatal to plaintiffs’ claims,” Suno wrote in its filing. “It is fair use under copyright law to make a copy of a protected work as part of a back-end technological process,invisible to the public, in the service of creating an ultimately non-infringing new product.”
A spokeswoman and an attorney for the labels did not immediately return a request for comment.
R. Kelly is asking the U.S. Supreme Court to overturn his convictions on child pornography and enticement charges, arguing the case should have been barred by the statute of limitations.
In a petition filed with the high court on Monday (July 29), attorneys for the disgraced R&B singer asked the justices to take up his case and toss out an April ruling by a lower appeals court, which said that “no statute of limitations saves him” from his 2022 convictions.
Kelly’s attorney, Jennifer Bonjean, argued that an updated federal law extending the statute of limitations, passed in 2003, could not be applied retroactively to Kelly’s alleged crimes, which occurred in the late 1990s and early 2000s.
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“Retroactive application of the 2003 amendment not only fly in the face of congressional intent,” Bonjean writes. “It violates notions of fundamental fairness.”
Like all appeals to the Supreme Court, Kelly’s case faces long odds. The high court receives thousands of petitions per year and only decides to hear a tiny fraction them.
This week’s petition deals with only one of Kelly’s two sets of felony sex abuse convictions. The other one — a September 2021 guilty verdict on racketeering charges brought by prosecutors in New York that resulted in a 30-year prison sentence — is currently pending on appeal before a lower appellate court.
In the current case, a different team of federal prosecutors from Chicago accused Kelly of violating child pornography laws, enticing minors for sex and obstructing justice by upending a 2008 criminal trial. Though he was acquitted on certain counts, Kelly was convicted in September 2022 and later sentenced to 20 years in prison; the vast majority of that sentence will be served concurrently with the New York sentence.
Bonjean, who famously won a 2021 ruling at the Pennsylvania Supreme Court overturning Bill Cosby‘s 2018 sex assault conviction, has repeatedly argued that Kelly is innocent and that she will take his cases all the way to the Supreme Court.
In doing so on Monday, she focused on the PROTECT Act — a 2003 federal statute aimed at preventing child abuse. Among other changes, the 2003 law eliminated the statutes of limitations for child sex abuse victims, extending the right to sue through the entire life of the victim.
But Bonjean said the PROTECT Act was not written to apply retroactively to crimes allegedly committed before it was passed. Without a clear intention from Congress to apply it to past crimes, she wrote, a law must be considered to only apply to future wrongdoing.
“This court has explained that the aversion to retroactive rulemaking is deeply rooted in our jurisprudence and embodies a legal doctrine centuries older than our Republic,” she wrote. “Elementary considerations of fairness dictate that individuals should have an opportunity to know what the law is and to conform their conduct.”
StubHub is facing a lawsuit from Washington DC’s attorney general over allegations that the ticket resale platform foists “convoluted junk fees” on concertgoers after luring them in with “deceptively low prices.”
In a complaint filed Wednesday, Attorney General Brian Schwalb accuses StubHub of violating the District’s consumer protection laws by using the “drip pricing” — an “exploitative pricing scheme” in which a company requires consumers to pay fees that weren’t advertised in the initial price.
“For years, StubHub has illegally deceived District consumers through its convoluted junk fee scheme,” Schwalb said in a statement announcing the case. “StubHub lures consumers in by advertising a deceptively low price, forces them through a burdensome purchase process, and then finally reveals a total on the checkout page that is vastly higher than the originally advertised ticket price.”
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The “hidden” fees imposed by StubHub total “upwards of 40% of the advertised ticket price,” the lawsuit claims, and DC consumers have allegedly paid $118 million in such fees since 2015.
In a statement, StubHub said the company was “committed to creating a transparent, secure and competitive marketplace” for its customers. “We are disappointed that the DC Attorney General is targeting StubHub when our user experience is consistent with the law, our competitors’ practices and the broader e-commerce sector. We strongly support federal and state solutions that enhance existing laws to empower consumers, such as requiring all-in pricing uniformly across platforms.”
Consumers have complained for years about “convenience” and “service” fees that are tacked onto the price of tickets for concerts and other live events. Laws requiring “all-in pricing” — the full, final cost, presented at the beginning of a sale — have been enacted by New York, California and other states in recent years. A federal bill (Transparency in Charges for Key Events Ticketing, or TICKET, Act) was passed by the House of Representatives in May and is awaiting a vote in the Senate.
Hidden fees are also a key accusation in the pending antitrust lawsuit against Live Nation filed by the Department of Justice earlier this year. In that case, the DOJ has argued that such fees levied by Ticketmaster on American concertgoers “far exceed” those in other countries.
“Any fan who has logged onto Ticketmaster’s website to buy a concert ticket knows the feeling of shock and frustration as the base cost of the ticket increases dramatically with the addition of fees,” the DOJ wrote in its complaint against Live Nation. “Whatever the name of the fee and however the fees are packaged and collected, they are essentially a ‘Ticketmaster Tax’ that ultimately raise the price fans pay.”
In Wednesday’s lawsuit, Schwalb argues that StubHub imposes those same fees on its customers. Calling it a “a classic bait-and-switch scheme,” the lawsuit claims the final price of a StubHub ticket is only revealed after customers have “invested time and effort clicking through an intentionally long, multi-page purchase process” — which features a countdown clock to “create a false sense of urgency.”
“StubHub designed this unfair and deceptive scheme to make more money,” Schwalb wrote. “By forcing consumers to click through over a dozen pages before they see the real price, StubHub puts consumers in the position of having to choose between either paying those unexpected fees or abandoning the time and effort they have expended.”
In addition to springing such fees at the end of a transaction, the lawsuit also accuses StubHub of choosing deceptive names for them — a claim that echoes longstanding complaints about what vaguely-named ticketing fees imposed by many companies actually cover.
“What StubHub identifies as ‘Fulfillment and Service Fees’ are in fact influenced by factors unrelated to ‘fulfillment’ or ‘service,’” the lawsuit reads. “Furthermore, the fees vary wildly, and StubHub never discloses to the consumer how those fees are calculated or what services these fees fund.”
Read the entire lawsuit against StubHub here: