Photo Credit: StubHub
The Washington, D.C. Attorney General is suing StubHub with allegations of deceptive advertising and unfair pricing.
Washington, D.C. Attorney General Brian Schwalb has sued online ticketing platform StubHub on Wednesday, July 31, alleging unfair pricing and deceptive advertising. The lawsuit claims StubHub utilizes deceptive advertising of low ticket prices to attract customers, who then pay vastly more by the end of the “intentionally” arduous checkout process.
“This is no accident — StubHub intentionally hides the true price to boost profits at its customers’ expense,” said Schwalb.
The lawsuit comes at a time when both consumers and lawmakers have been highly critical of ticket sellers charging hidden or “junk” fees. Similarly, airlines have faced allegations of deceptive pricing.
Schwalb’s lawsuit alleges that StubHub uses a system called “drip pricing” which makes use of a countdown clock to manufacture a false sense of urgency. Further, the filing argues that the ticketing platform adds on substantially higher “fulfillment and services fees” without “adequate explanation.”
In a response to the lawsuit, StubHub says it “strongly supports” federal and state proposals to enhance existing laws to “empower customers,” such as requiring all-in pricing. The ticketing platform has been looking at an initial public offering this summer, with a valuation of over $16 billion — but the company recently announced it would delay the IPO until after Labor Day, citing a “difficult market.”
“StubHub is committed to creating a transparent, secure, and competitive marketplace to benefit customers,” the company said. “We are disappointed that the D.C. Attorney General is targeting StubHub when our user experience is consistent with the law, our competitors’ practices, and the broader e-commerce sector.”
The attorney general’s office cites in its lawsuit that from 2014 to 2015, StubHub used all-in pricing, but that the company did a testing period where it randomly assigned consumers to one of the two pricing models. In its testing, StubHub allegedly found that if it hid fees until the end of the checkout process, consumers were more likely to buy tickets at higher prices.
“The District of Columbia is particularly impacted by StubHub’s illegal conduct, as residents and visitors spend more per capita on live entertainment in Washington, D.C., than those in many other US cities,” said the attorney general’s office. “StubHub never explains to consumers throughout the purchase process how the fees for a particular ticket purchase are calculated.”
One example shows a pair of tickets with an advertised price of $178 per ticket, and $356 for the pair. But as the clock ticks down, the checkout page shows the total price around 40% higher, at $497 for the pair. The attorney general’s office estimates around $118 million in hidden fees have been extracted by StubHub since 2015, having sold over 5.5 million tickets to consumers in the district.
StubHub is also facing a federal class action lawsuit filed in January for allegations that it deliberately misled customers on ticket prices.
