Vivid Seats (NASDAQ: SEAT) has settled a dispute over refunds related to several major white label ticketing clients, agreeing to pay out $4.4 million in refunds to consumers in New York. The agreement, announced by New York Attorney General Letitia James Friday morning, stems from refunds that Vivid Seats’ clients refused consumers for events cancelled in the wake of the COVID-19 pandemic. New York law requires that consumers be offered refunds for events that are cancelled.
Vivid Seats’ white label subsidiary – Ticket Fulfillment Services, L.P. – was the main party in the settlement, which covers refunds that were denied to both residents of New York and consumers from outside of the state who purchased tickets to events there. Clients involved in the settlement include five of Vivid Seats’ largest white label clients – RYADD, Inc., Denver Media Holdings, LLC, Event Ticket Sales, LLC, Internet Referral Services, LLC, and Theatreland, Ltd.
“As New Yorkers were suffering from the economic fallout of the COVID-19 pandemic, TFS and its affiliates illegally denied refunds to thousands of consumers for events that were cancelled — all while pocketing millions of dollars in the process,” said Attorney General James. “Today, I’m proud to announce that we’ve helped secure $4.4 million in refunds for any consumer who purchased tickets for events in New York that wants one, and that we’ve forced TFS and its affiliates to change their cancellation process going forward. If an event is cancelled, consumers can rest assured that they will have a right to a refund. My office is committed to delivering justice, which is why we will continue to do everything in our power to protect the welfare and wallets of New Yorkers.”
Consumers who purchased tickets through any of the impacted companies that have not yet received a refund for tickets to an event that had been cancelled can contact customer support for the website to ask for their refund. James’ office published the following list of websites impacted by the settlement, which are all Vivid Seats white label affiliates:
Albany Theater, Austin Theater, Bold Ticket, Boston Theater, Buffalo Theatre, Chicago Theater, Cincinnati Theater, Denver Theater, Durham Theater, Fort Myers Theater, Grand Rapids Theater, Hershey Harrisburg Theatre, Las Vegas Theater, Nashville Theatre, New York City Theatre, Norfolk Theater, Online City Tickets, Orlando Theatre, Philadelphia Theater, Pittsburgh Theater, Portland Theater, Rochester Theater, Salt Lake City Theater, San Francisco Theater, Sarasota Theater, Seats, Seattle Theatre, Secure Box Office, Syracuse Theater, Theatre Land America, Tickets Center, Tickets on Sale, Toronto Theatre, or West Palm Theater.
Detailed within the complaints are a policy shift that took place in the spring of 2020 as COVID caused a wave of live event cancellations. From the RYADD complaint (TFS refers to Ticket Fulfillment Services, L.P. – which is a wholly owned subsidiary of Vivid Seats):
During the months of March and April 2020, RYADD and TFS began to confer about the extensive dislocation in the secondary market for ticket events, and its impact on RYADD’s finances.
As cancellations continued to pile up, RYADD and TFS coordinated to limit RYADD’s exposure to an anticipated wave of refunds. On or about April 14, 2020, RYADD told TFS that it wanted to modify the terms of the Resale Websites’ Policies and FAQ pages to remove language referring to “full refund[s]” and refer instead to “‘compensate’ or similar language.” TFS promptly revised the policies in line with this request. The new Policies did not explain that the “compensation” RYADD intended to give consumers was in the form of store credit in lieu of a cash refund, even for consumers who had purchased tickets prior to the change
in the language.
On April 16, 2020, RYADD informed TFS that it “[did] not see any other way to stay in business unless we offer credit for future purchases on cancelled events” and requested that TFS help change its default response to canceled events from a full refund to a 120% store credit to be redeemed within the next 12 months. RYADD told TFS that this change was an effort “to do what is best for our customers,” and the following day RYADD asked TFS to send emails to customers notifying them of the new policy.
The settlement over refunds withheld from consumers for COVID cancellations isn’t the first for either Vivid Seats or its white label clients. Virginia attorney general Mark Herring announced a $200,000 settlement with RYADD earlier this year. In that action, Herring secured refunds and civil penalties over complaints that RYADD’s TicketsOnSale.com website had engaged in deceptive trade practices when it failed to honor its “100% Buyer Guarantee” for events cancelled due to the pandemic. Vivid Seats itself settled a class action related to withheld refunds for $7.5 million earlier this year.
The impact of the settlement announcement on the market price of Vivid is not yet apparent as of Friday morning – the company just completed its merger with a SPAC and became public traded earlier this month. After closing at $13.75 Thursday, SEAT has dipped only slightly as trading opened, and is at $13.65 as of about 10 a.m.
