Hot on the heels of Minnesota and Connecticut, North Carolina is the latest state to consider regulating paperless tickets to protect consumers and the...

Hot on the heels of Minnesota and Connecticut, North Carolina is the latest state to consider regulating paperless tickets to protect consumers and the secondary ticket market, a potential blow Live Nation’s Ticketmaster division which is heavily promoting a restrictive form of the technology.

Like those other states, North Carolina is looking at formalizing assurances that ticket issuers will not use a restrictive form of paperless tickets that are difficult or impossible to transfer. The proposed bill, HB308, is currently before the North Carolina House Commerce and Job Development Committee where it will be discussed in the near future.

Proponents of restrictive paperless tickets argue that the technology offers consumers protections by locking down face values for tickets and limiting or altogether thwarting their resale or transfer. By eliminating transfer, an artist or team can better ensure that tickets are only sold to fans who are planning to attend the event.

However, opponents of restrictive paperless tickets argue that not everyone who buys a ticket can go to an event, due to unforeseen occurrences, or they bought the ticket as a gift for someone else. Restrictive paperless tickets tie the ticket to the purchaser’s credit card or other ID. In addition, if resale is allowed, paperless tickets often have to be bought or sold on a specific exchange and often not for less than face value.

The North Carolina proposal prohibits:

Employing technological means for the purpose or with the foreseeable effect of prohibiting or restricting the resale of admission tickets, including, but not limited to, issuing admission tickets in an electronic form that is not readily transferable to a subsequent purchaser, or conditioning entry into the venue on presentation of a token, such as the original purchaser’s credit card or state-issued identification card, that cannot be readily transferred to a subsequent purchaser.

And, the bill also bans a ticket issuer from “Seeking to limit or restrict the price, or to impose a minimum or maximum price, at which an admission ticket may be resold.”

John Breyault, spokesperson for the National Consumers League (NCL) applauded the North Carolina legislature for proposing what he considers to be a potentially strong consumer protection bill. He cautioned that despite the language, legislators should be wary of possible abuse of the statute by some ticket issuers. The NCL and other supporters of the bill, such as the Fan Freedom Project, are not against paperless ticketing technology, just the restrictive form of it.

“Given the often opaque relationship between primary ticketers like Ticketmaster and their client venues, I worry that venues would take advantage of this section of the law and make a habit of prohibiting resale, particularly for high-demand shows,” Breyault said.

The bill also contains transparency language that would require ticket issuers to disclose the number of tickets being made available for an event, which would let fans know how many tickets are being released and how. Venues, artists and promoters have long held such disclosures close to the vest because tickets are often withheld for various groups and constituencies.

The bill reads in part:

Advance Notice Requirement – A ticket issuer shall provide advance public notice of its ticket policies for each event subject to this Article. The notice, which shall be posted conspicuously on the issuer’s Web site and at physical locations where tickets are issued to the public, shall include the following information:

(1) Identification of the event, including the date, time, and location.
(2) The total number of admission tickets to be issued for the event, whether by public sale or otherwise, and the number of tickets for every class, tier, or level of admission offered.
(3) The total number of admission tickets to the event that will be made available for purchase by members of the general public as public sale tickets subject to this section, and the number of tickets for every class, tier, or level of admission offered.
(4) The established price for each class, tier, or level of admission offered which will be designated as public sale tickets, including the amount of any premium, service charge, or other fee applicable to the sale of a ticket.
(5) The on-sale date and time.
(6) A complete list of the outlets at which the public sale admission tickets will be made available for sale to the general public on the date and at the time specified, including a list of all Internet Web sites at which such tickets will be made available.

Breyault said that passage “would allow consumers to have a better understanding of the true supply of available tickets to a particular event,” which he believes is crucial in giving fans a fair shot at tickets.

“We are glad that the rights of consumers, particularly season-ticket holders, to transfer or resell a ticket on an open, competitive secondary market would be protected. We are also heartened by the requirements that ticket resellers maintain strong refund policies and have a toll-free telephone customer support line,” Breyault said.