Washington D.C. Attorney General Brian L. Schwalb says the ticket resale platform uses a bait-and-switch to manipulate consumers and boost profits
StubHub, the online ticket resale platform, was accused of deceiving customers through a “convoluted junk fee scheme” in a new lawsuit brought by Washington D.C. Attorney General Brian L. Schwalb.
Coming on the heels of the DOJ’s efforts to break up Live Nation and Ticketmaster, the new lawsuit accuses StubHub of violating D.C.’s consumer protection laws. It aims to “remedy and end” the company’s allegedly “unfair and deceptive practice of charging hidden junk fees to consumers.”
According to the complaint, StubHub uses a variety of practices — referred to as “digital ‘dark patterns’” — to influence and manipulate consumers into buying tickets at steep prices, while also hindering their ability to comparison shop.
In a statement, Schwalb said: “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. This is no accident — StubHub intentionally hides the true price to boost profits at its customers’ expense.”
StubHub responded to the suit, saying, “StubHub is committed to creating a transparent, secure, and competitive marketplace to benefit consumers. 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. We strongly support federal and state solutions that enhance existing laws to empower consumers, such as requiring all-in pricing uniformly across platforms.”
StubHub’s allegedly deceptive tactics begin with what the suit calls a “classic bait-and-switch scheme” known as “drip pricing.” This tactic, per the suit, involves advertising only part of a product’s price, before revealing additional charges as the buyer completes the purchase.
The “bait,” per the suit, are the low ticket prices users first see that do not include StubHub’s mandatory fees. The “switch” comes after a user has selected their tickets, “invested time and effort clicking through an intentionally long, multi-page purchase process (in which customers are confronted with a countdown clock to create a false sense of urgency)” and then sees the full price.
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This practice, the complaint claims, is “intentional,” and was “implemented to pad [StubHub’s] profits at the expense of consumers.” Between 2014 and 2015, StubHub allegedly conducted a test that randomly offered users one of two pricing models: “All-in Pricing,” where users saw the full price, including fees and taxes, and “back-end fee” pricing, where the full extent of the fees were revealed at the checkout page.
According to the suit, StubHub found that consumers were “less likely to purchase tickets when the full price was transparently displayed at the outset compared to when fees were hidden until the end of the transaction.” After the test, the suit claims StubHub “abandoned All-in Pricing” in favor of the “back-end fee strategy for all purchases — knowing that it could extract more and higher fees from its consumers through this unfair and deceptive practice.”
As for the fees themselves, the suit accuses StubHub of misrepresenting its purpose. For instance, it claims that “Fulfillment and Services Fees” are “influenced by factors” that have nothing to do with “fulfillment” or “service,” such as ticket price and supply and demand. The fees also “vary wildly,” the suit claims, adding that StubHub “never discloses to the consumer” how they are calculated or what they fund.
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“In short, consumers are misled and left in the dark about what they are actually paying for,” the suit claims. “And, the fees are hardly incidental, totaling upwards of 40 percent of the advertised ticket price.”
The suit also dismisses StubHub’s ostensible efforts to provide users with estimated fees when viewing tickets. To see this information, users have to find the “Estimated Fees Filter”; but according to the suit, this option is “hidden under multiple drop-down menus such that a reasonable user of the service is unlikely to find and use” it.
