Last week, event ticket resale website TicketNetwork, Inc. and two of its marketing partners, Ryadd, Inc. and SecureBoxOffice, LLC (collectively the “Defendants”), settled a lawsuit brought against them by the Federal Trade Commission (“FTC”) and the Connecticut Attorney General’s Office. Among other things, the Defendants have agreed to pay $1.4 million into a Connecticut fund dedicated to consumer education and enforcement.
Alleged Deceptive Advertising
The Defendants operate and advertise an e-commerce website that enables ticket brokers and ticket-holders to resell event tickets to consumers on the secondary market. The complaint brought against the Defendants alleged that they were violating both the FTC Act and the Connecticut Unfair Trade Practices Act by using advertising practices that were intended to mislead consumers into believing that they were buying event tickets directly from the venue at face value. Instead, according to the FTC, the Defendants failed to disclose that their websites were actually ticket reseller sites, offering event tickets often priced much higher than their original face value.
According to the FTC, the settlement terms with the Defendants are as follows:
- 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, Inc. must require all partners to sign written contracts promising to adhere to the order and appropriately handle any and all consumer complaints about venue confusion; and
- The Defendants will pay a total of $1.4 million to the State of Connecticut.
As we have previously blogged, the FTC has been incredibly active in pursuing unscrupulous Internet marketers. Using the powers of the FTC Act, the CAN-SPAM Act, the Telephone Consumer Protection Act, and other regulatory laws, rules and regulations the FTC, FCC and various state attorneys general have been vigilant in their efforts to ensure that marketers comply with the law.