A consumer has filed a class action lawsuit against StubHub, according to a report by Law360.com. The lawsuit is over the ticket resale giant’s recent shift from providing refunds to cancelled events to providing vouchers worth 120% of the order value. The change, announced last week, has caused some to posit that StubHub is in dire financial straits over the sudden impact of the Covid-19 pandemic on live events.
Filed in Wisconsin by Matthew McMillen, the lawsuit claims the company has no right to “retroactively” back out of its “longstanding ‘FanProtect’ guarantee… in response to apparent liabilities it would incur stemming from the Covid-19 pandemic.” While StubHub is providing refunds in states which have laws on the books requiring it to, residents of other states holding tickets to cancelled events are only being offered a voucher good towards future ticket purchases – a move designed to avoid potential liquidity problems stemming from difficulty in recouping payments already made to sellers on the marketplace for events that have since been cancelled.
McMillen’s lawsuit blames the company – which was sold by eBay to EU resale giant Viagogo for $4 billion in February – for its own hardships on that front.
“Instead of instituting responsible financial transaction policies, defendants made it their practice to pay ticket sellers before the event had occured, exposing themselves to the possibility that they would be left holding the bag (or have to ignore their own guarantee and cheat their customers) if an event was cancelled and they could not promptly collect from sellers.” the lawsuit says.
Generally, StubHub and other similar ticket resale operations allowed refunds to consumers when events were cancelled. Postponements meant that tickets were simply valid on the new date of the performance. In early March, the company announced it would be giving consumers the choice between a refund or a voucher good for 120 percent of the price paid if an event was cancelled rather than rescheduled. But the rapidly expanding impact of the coronavirus on events across the globe prompted the company to announce its shift to only offering the vouchers late last month.
“As a marketplace, we act as an intermediary for buyers and sellers,” StubHub said at the time. “In normal times, we’ve made the decision to refund buyers before collecting money from the seller to offer buyers more convenience. And under normal circumstances, this works well, even with StubHub taking the risk of timing delays and some losses when we are unable to collect from the seller.“With the coronavirus impacting 28,000 events and the associated magnitude of challenge in recouping monies owed by sellers over the coming months, it is currently impossible for us to offer immediate cash refunds for all buyers.”
The lawsuit targets StubHub and Last Minute Transaction Inc. with claims for breach of contract and violations of California false advertising laws.
“Dumping promised refunds for expiring coupons during the time of greatest financial suffering in recent history is cruel and wrong, especially because people have no idea if they’ll even be able to use the coupons. We don’t know what the next 12 months are going to look like,” said McMillan’s attorney Nicholas Coulson of Little & Dubin PC.
“Through this action, we hope to provide people some small bit of relief during this uncertain time,” he added.