How To Manage Chargebacks in the Ticketing Business How To Manage Chargebacks in the Ticketing Business
Retailers of all stripes can benefit from the ticketing business. For some, ticket sales are the main source of revenue, but for many more... How To Manage Chargebacks in the Ticketing Business

Retailers of all stripes can benefit from the ticketing business. For some, ticket sales are the main source of revenue, but for many more it’s an opportunity to supplement sales or to promote special events. Either way, your customers are doing just about all their ticket buying online, from a variety of vibrant primary and secondary e-commerce marketplaces. And as with any online transaction, this comes with its share of risk.

There are three types of ticket sellers:

1. The Venue/Presenter

When thinking about the venue, most people think about sports stadiums or concert halls. While those may be responsible for the bulk of the money going through the ticketing industry (due to the large venue size and high ticket prices) the vast majority of ticketed events are held at a much smaller scale. Bars, restaurants and breweries might be booked for live music events, club meetings or art shows, with the venue and presenter selling tickets directly to fans and customers. Stores launching new products or holding special events may sell tickets to their clientele to manage a limited capacity.

2. Primary Sellers

Many small venue owners may themselves be the primary ticket sellers for their own events. Retailers such as music stores and sporting good stores can also supplement their revenue by selling tickets to events held in their local area. But these days, most sales go through ticketing platforms such as Eventbrite. These are services that allow event presenters to create a landing page where consumers can purchase their tickets through a secure platform and the proceeds (minus any fees) can be paid out in a lump sum to the presenter after ticket sales are closed.

3. Secondary Sellers

One of the biggest market disruptors in recent years is the rise of the secondary market. While scalpers are nothing new, the real game-changer in ticketing is the success of platforms like StubHub which act as middlemen for individuals who want to buy and sell tickets. While they eliminates some of the risk of person-to-person sales, these markets are also known for volatile price fluctuations and, though most offer a money-back guarantee against fake tickets, there remains a higher level of risk than in the primary market.

Chargeback Causes

The reason why most secondary ticketing platforms offer guarantees against fake tickets is because it’s cheaper for them to give the buyer their money back than to have the buyer issue a chargeback dispute against them. A chargeback is when the consumer initiates a reversal of the credit card transaction through their issuing bank. When hit with a chargeback, the vendor not only loses the value of the transaction, but is also subject to fees and penalties. Issuing a refund eliminates that risk.

Unfortunately, a money-back guarantee isn’t going to prevent chargebacks entirely. For example: typically, event tickets are non-refundable, so if you find out you’re unable to attend an event for which you’ve already bought tickets, you’re probably going to try to sell it on Facebook, Craigslist or StubHub. But if this tactic fails, you have one more (unethical) option for getting your money back: filing a chargeback.

More often, though, chargebacks are caused by fraud. The ticket buyer calls their bank and tells them they never authorized the transaction (and the bank almost always takes their word for it). The buyer is either telling the truth – which means the tickets were purchased using stolen credit card information – or they’re telling a lie – which means it’s a scam or “friendly fraud”. The most common form of the scam involves purchasing a group of tickets, reselling them for a profit, and then disputing the original purchase in order to maximize profits. Either way, you lose the money – unless you can fight it and win.

Managing Chargebacks

Putting on an event is expensive and finding out after the fact – often months later – that a portion of your ticket sales were disputed can put a major dent in your profit margins. Rigorous documentation is key to managing chargebacks:

  • Use two-step verification to make sure the identity of the buyer matches the credit card information.
  • Look for the warning signs of scammers – such as their address being nowhere near the location of the event – and flag those buyers for additional confirmation, such a requiring them to complete the purchase over the phone.
  • Enforce purchase limits (such as max. 4 tickets per person) to deter scalpers and scammers.
  • Deliver tickets digitally by email so you’ll have a proof of delivery.
  • On the date of the event, scan attendees’ tickets to prove that they were used.

By keeping detailed documentation on every buyer and every ticket sold, you not only prepare yourself to dispute – and win – any chargebacks that may be filed, but you also send a strong message to scammers that you are not going to go down without a fight. The ticketing business is a great money-making opportunity and there are a variety of ways for businesses to tap into it – such as venue owners promoting their space, retailers offering a sales channel for local event promoters, and entrepreneurs offering innovative new solutions for primary or secondary market sales – but a key to succeeding in this competitive field is to maximize profit margins by keeping chargebacks under control.

Author Bio: Suresh Dakshina, President of Chargeback Gurus

A pioneer in data analytics and industry-specific risk management, Suresh Dakshina is the President of Chargeback Gurus. He is a certified e-commerce fraud prevention specialist and a Certified Payments Professional who knows firsthand the challenges business owners face, especially when it comes to chargebacks and fraud. Suresh holds a Master’s degree from University of Southern California and has consulted Fortune 5000 companies for over a decade on chargeback and fraud minimization. Suresh Dakshina is a veteran speaker and works closely with Card Networks such as Visa, American Express on chargeback process optimization and compelling evidence policies.

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