Pres. Biden Asks for Ban on “Junk Fees”, Holdback Transparency
ConcertsIndustryLegalMusicSportsTop Story February 1, 2023 Dave Clark
President Biden asked legislators to take action on his competition agenda Wednesday morning, and near the top of his list of priorities is reform in live event ticketing. He asked lawmakers to put forward a so-called Junk Fee Prevention Act that would “crack down on excessive online concert, sporting event, and other entertainment ticket fees” by prohibiting excessive fees, requiring that such fees be disclosed up front, and also mandate disclosure of “any ticket holdbacks that diminish available supply.”
“While antitrust enforcement agencies have the authority to investigate and address anti-competitive conduct in the industry, the President urges Congress to act now to reduce these fees through legislation,” the White House said in its release announcing the priorities.
The focus on junk fees is nothing new – the Federal Trade Commission has been pushing for reform on fees in ticketing for several years coming out of a pre-pandemic hearing on the industry, and the President indicated his support for such reforms in the fall of 2022. But the holdback transparency is another key factor for consumers – who often don’t realize that event operators regularly keep large percentages of tickets held back from sale, giving the appearance that an event is close to or even fully sold out, causing them to purchase tickets for fear of missing out on the opportunity, regardless of how high the prices have been surged.
While companies like Ticketmaster and Live Nation regularly blame ticket resale or “bots” for the enormous spike in ticket prices consumers are paying, many believe that price inflation by hiding the true available supply through holdbacks is the biggest factor in that price surge, with the industry hoping to sell consumers and lawmakers on resale being the issue rather than their own deceptive practices.
Rep. Bill Pascrell, a longtime critic of Ticketmaster and Live Nation who is the principal sponsor of the BOSS Act – a bill proposing numerous reforms to the ticketing industry that specifically addresses both junk fees and holdback transparency – applauded the President’s focus on the need for reform.
“Today President Biden announces one of the most consumer-friendly platforms ever uttered by an American leader,” said Rep. Pascrell. “Modern life has become frustrating for so many Americans as they face a seemingly endless line of bills and hidden fees seeking to lighten our pockets. The surprise fees leveled at fans and keeping fans in the dark about ticket holdbacks for live events epitomizes that hostility to regular Americans. For decades, American fans have cried out for help, cried out for regulation of a marketplace that has become more larcenous than a Wild West saloon. This is something all Americans, Democrats, Republicans, and Independents agree on: fees are strangling Americans and at long last they must be stopped. President Biden supporting our cause the week after industry reforms were also demanded by a bipartisan Senate panel proves that the time for action is now. We can institute many of these reforms by enacting my BOSS ACT, longstanding legislation I’ve put forward to reform the ticketing marketplace.”
Support for President Biden’s plan was also put forward by the National Association of Ticket Brokers, a trade group supporting ticket resale rights and consumer-friendly policy. Its statement specifically called out the “scheme called slow ticketing” used by Ticketmaster and Live Nation to hold back huge portions of tickets for most events without disclosure when tickets go on sale. Once the public is convinced that tickets are sold out, additional tickets are slowly released to the market, leading to a perceived yet artificial scarcity that convinces consumers to pay surged prices – referring to the process as a deceptive marketing practice.
“We applaud President Biden and his administration for wanting to address certain problems that infect the ticketing ecosystem,” the statement reads, in part. “This is a terrific signal from the White House just one week after the U.S. Senate provided the world with a front row seat to learn about how uneven, unfair, and rigged the live events system is today. Hopefully this will result in greater transparency and competition in the market so that consumers have more information, options, and freedom when it comes to buying tickets.”
As far as “junk fees” are concerned, most consumers are well aware of the standard operating procedure for live event ticketing. Almost every website out there offering tickets for sale – regardless of whether they are box office or resale tickets – displays one ticket price while consumers are browsing an event. That price is not the actual price, however. The true price is typically far higher, as much as 50 percent higher, according to a GAO report cited by the White House in Wednesday’s release. The true price is not revealed until deep into the transaction process, when consumers have typically committed to buying the tickets regardless of the added fees.
To consider such fees in practice, lets compare listings for Super Bowl LVII tickets on three ticket resale marketplaces. Two – StubHub and Vivid Seats – are traditional service fee systems, which do not show fees up front. Consumers shopping on either will find a ticket available for purchase in Section 453, Row 22. On StubHub, that ticket is shown as having a price of $5,176. On Vivid, it is displayed with an asking price of $5,356. A third site – Ticket Club – is a membership-based system where consumers do not pay a service fee over the display price. There, the same section and row ticket cost is $6,106.
If someone is comparison shopping, it seems cut-and-dried – StubHub has the best deal, followed by Vivid Seats, with Ticket Club substantially more expensive. But when you actually click through to the purchase point, the seats on StubHub are subject to fees that add more than 35% of the displayed price, bringing the actual consumer price to $6,993. Vivid Seats fees are slightly less – the price jumps by a mere $1,013 to $6,369. So the actual price charged by Ticket Club for its members is more than $200 less than Vivid Seats and $800 below StubHub’s value.
Ticket marketplaces were warned that all-in pricing rather than drip pricing should become the norm, and some websites have embraced the process – or at minimum instituted a toggle that allows consumers to view tickets including estimated fees while browsing, but it seems clear that many companies do not want to be transparent about fees without a requirement to do so. StubHub has even removed its toggle to view prices with fees (Vivid Seats never had one).
There is no timeline for when President Biden expects legislation to be drafted, but Rep. Pascrell has introduced the BOSS Act several times, most recently in 2019. Senator Amy Klobuchar, who led last week’s Senate Judiciary Hearing on live event ticketing, has indicated that legislation is already being drafted.
TicketNews reached out to Live Nation and Ticketmaster for their thoughts on President Biden’s push for legislation. No response has been received as of mid-day Wednesday. This story will be updated that changes.
Last Updated on February 1, 2023 by Dave Clark