Ticket exchange company flouts NAD recommendations regarding additional fees

Everybody Else Is Doing It!

The National Advertising Division was unmoved.

Under the National Advertising Division’s (NAD) consideration: StubHub, a website that features tickets to sports events, concerts, theater and other live entertainment events. The division was taking a close look at StubHub’s pricing conventions – specifically, the fact that the website was advertising ticket prices upfront without adding in taxes and fees (which were disclosed to the customer only at checkout).

StubHub’s response to the investigation would be familiar to any parent of a middle-schooler: All major ticket-sale websites followed the same disclosure practices. Because everyone was doing it, the consumer had an understanding of what to expect when making a purchase. In addition, the company claimed that it had, in the past, listed the entire charge upfront, and lost market share because of it.

Practice Imperfect

NAD maintained that an industry-standard practice wasn’t enough to establish that consumer expectations conformed to that practice.

In particular, NAD noted that StubHub listed a new, higher price at checkout, but did not itemize the additional amount except on a separate disclosure page. Moreover, service fees in the industry are not standardized and can vary significantly, making apples-to-apples price comparisons difficult prior to the purchase process.

The Takeaway

NAD notes in its case report that “information that is material to a claim must be clearly disclosed in close proximity to the claim,” with the upshot that StubHub’s fees and services need to be disclosed when the initial price is advertised. This, the division maintains, follows the Federal Trade Commission’s (FTC) disclosure philosophy: Consumers must have all the information they need before they decide to buy.

NAD requested that StubHub update its advertising to reveal its service fees. StubHub declined to adopt this recommendation, saying, “StubHub thanks NAD for its review of the company’s fee-disclosure practices but respectfully disagrees with NAD’s conclusions.”

The case has been referred by NAD to the FTC.