Legislative History for Connecticut Act

SA 15-12 SB976 House 7140-7144 4 Senate 2683-2686 4 General Law 1001-1003, 1006-1009, 41 1144-1147, 1156-1185 49

Transcripts from the Joint Standing Committee Public Hearing(s) and/or Senate and House of Representatives Proceedings

Connecticut State Library

Compiled 2017

H – 1222

CONNECTICUT GENERAL ASSEMBLY HOUSE

PROCEEDINGS 2015

VOL.58 PART 21 6944 – 7296

007140 /rc/ks/dm 366 HOUSE OF REPRESENTATIVES June 1, 2015 c DEPUTY SPEAKER MILLER: The bill passes. [gavel] Will the Clerk

please announce- call Calendar No. 674.

CLERK:

On page 44, House Calendar 674, Favorable

Report of the Joint Standing Committee on General

Law, Substitute Senate Bill 976, AN ACT CONCERNING

A STUDY OF THE FAIR SALE OF TICKETS TO

ENTERTAINMENT EVENTS.

DEPUTY SPEAKER MILLER:

Representative Baram.

REP. BARAM (15th):

0 Good evening, Madam Speaker. I move for acceptance of the Joint Committee's Favorable

Report and passage of the bill in concurrence with

the Senate.

DEPUTY SPEAKER MILLER:

The question before the Chamber is on

acceptance of the Joint Committee's Favorable

Report and passage of the bill. Representative

Baram, you have the floor, sir.

REP. BARAM (15th):

Thank you, Madam Speaker. This, indeed, is a ·C request for another study, but this is a topic 007141 /rc/ks/dm 367 HOUSE OF REPRESENTATIVES June 1, 2015 that has been raging for the last three or four

years involving the sale of tickets. It involves

controversies between brokers, resellers, and

venue sites involving a new way of selling

tickets. Right now we have paperless tickets, or

e-tickets, which require the purchaser to go to

the venue site and to show their driver's license

and a credit card and the tickets are not

transferrable or saleable to any other party.

We also have venues that are putting

restrictions on tickets in terms of who can have

them, who can purchase them, and this has created

a controversy between many of our venues from

entertainment sites like the Bushnell Hartford

Stage, even UCONN basketball and football and the

like.

So we have decided that we do need a

legitimate study in this case to give us the

proper facts so that we can have enough

information to sit down with all the parties and

come up with a set of regulations and rules that

will be fair to the consumer so that we can make

sure that we have consistency in the sale of such c tickets. 007142 /rc/ks/dm 368 HOUSE OF REPRESENTATIVES June 1, 2015 So with that explanation, I would move c passage of the bill.

DEPUTY SPEAKER MILLER:

Will you remark further on this bill? Will

you remark further on this bill? Representative

Carter.

REP. CARTER (2nd):

Thank you, Madam Speaker. Good study. Ought

to pass.

[applause] c DEPUTY SPEAKER MILLER: Will you remark further on this bill? Will

you remark further on this bill? Representative

Belsito.

REP. BELSITO (53rd):

Yeah. Thank you, Madam Speaker. Really. Do we

need a study on how to sell tickets or who to sell

tickets to or how much to sell tickets for? This

seems ridiculous to me. I'm not voting for this

bill. I'm gonna vote no. Thank you, Madam Speaker.

DEPUTY SPEAKER MILLER: c Thank you, sir. Will you remark further on 007143 /rc/ks/dm 369 HOUSE OF REPRESENTATIVES June 1, 2015 c this bill? Will you remark further on this bill? If not, will staff and guests please come to the

Well of the House. Will the members please take

your seats. The machine will be opened.

CLERK:

[bell ringing] The House of Representatives

is voting by roll. The House of Representatives is

voting by roll. Will members please report to the

Chamber immediately.

[pause] c DEPUTY SPEAKER MILLER:

Have all members voted? Have all members

voted? Will the members please check the board to

determine if your vote is properly cast. If all

the members have voted, the machine will be

locked, and the Clerk will take a tally. [pause]

Will the Clerk please announce the tally.

CLERK:

Senate Bill 976 in concurrence with the

Senate

Total Number Voting 145 c Necessary for Passage 73 007144 /rc/ks/dm 370 HOUSE OF REPRESENTATIVES June 1, 2015 Those voting Yea 97

0 Those voting Nay 48

Absent and not voting 6

DEPUTY SPEAKER MILLER:

The bill passes. [gavel] Will the Clerk

please call Calendar No. 68.

CLERK:

On page 3, Calendar 68, Favorable Report of

the Joint Standing Committee on Veterans' Affairs,

House Bill 6778, AN ACT CONCERNING VETERANS.

DEPUTY SPEAKER MILLER:

Representative Hennessy. c REP. HENNESSY (127th): Thank you, Madam Speaker. Madam Speaker, I

move for acceptance of the Joint Committee's

Favorable Report and passage of the bill.

DEPUTY SPEAKER MILLER:

The question before the Chamber is on

acceptance of the Joint Committee's Favorable

Report and passage of the bill. Representative

Miller, you have the floor, sir.

REP. HENNESSY (127th):

Thank you, Madam Speaker. The Clerk has an c Amendment LCO No. 9097. I ask that he call it and

S - 687 CONNECTICUT GENERAL ASSEMBLY SENATE

PROCEEDINGS 2015

VOL. 58 PART 9 2668 – 2992

002683 /tl 19 SENATE May 30, 2015 The bill passes. [gavel] Mr. Clerk. Oh, sorry. 0 Senator Duff. SENATOR DUFF:

Thank you, Madam President. Madam President, we'll just continue on with the call of the Calendar, but I will ask that we mark two more items on our Go List, please.

CLERK:

Please proceed, sir.

SENATOR DUFF:

Thank you, Madam President. On Calendar Page 32, Calendar 302, Senate Bill 448 is a go. And Calendar Page 31, Calendar 204, Senate Bill 879 is a go. And if the Clerk can now call Calendar Page 3, Calendar 235, Senate Bill 976.

THE CHAIR: 0 Mr. Clerk. CLERK:

On Page 3, Calendar 235, Senate Bill No. 976, an ACT. CONCERNING A STUDY OF THE FAIR SALE OF TICKETS TO ENTERTAINMENT EVENTS FAVORABLE REPORT OF THE COMMITTEE ON GENERAL LAW.

THE CHAIR:

Senator Leone. Good afternoon, sir.

SENATOR LEONE:

Good afternoon, Madam President, on a nice, fine Saturday. Madam President, I would move acceptance of the Joint Committee's Favorable Report and passage of the bill.

THE CHAIR: 0 002684 /tl 20 SENATE May 30, 2015 Motion's on acceptance and passage. Will you remark, 0 sir? SENATOR LEONE:

Thank you, Madam President. This bill is for the purpose to the require the Commissioner of Consumer Protection to conduct a· study concerning the fair sale of tickets to entertainment events. We've had a.lot of bit of testimony on this industry. It gets quite complex quickly, and that is the reason for the request of DCP for this study, and I would urge support.

THE CHAIR:

Will you remark further on the bill? Senator Witkos.

SENATOR WITKOS:

Thank you, Madam President. I rise in actually really strong support of the bill. This topic of secondary ticket sales has been going on in the General Law Committee for quite a number of years. And there's a lot of different ways folks have access to tickets 0 whether it•s through a fan club or whether the promoter holds back tickets or the coliseum holds back tickets or tickets are purchased through an electronic device.

And also part of that is when people think, 11 Well, it's a 40,000 arena - I can probably get tickets quite easily, .. when unbeknownst to them there may be only 1000 tickets that are available to the general public. So it's kinda a strange practice on how tickets are sold. And they change - vary state to state - so I think this will give the Committee a good idea on if there's fixes that need to be done, the right direction, and it will be based on a nice, factual study. And I urge the Chamber's adoption. Thank you, Madam President.

THE CHAIR:

Thank you. Will you remark further on the bill? Senator Leone. Whoops, Senator Leone do you want - 0 Senator Kane. 002685 /tl 21 SENATE May 30, 2015 0 SENATOR KANE: Thank you, Madam President. Briefly, I appreciate the work that Senator Leone and Senator Witkos have done on this, but this is yet another study. I think we have too many studies here in the state of Connecticut and a lot of'm just sit on a shelf. So I'll be voting in opposition. Thank you .

THE CHAIR: •

Thank you. Senator Leone, do you stand for any reason?

SENATOR LEONE:

Thank you, ~adam President. I thank the comments for the support of the bill, and I would ask for a roll call vote.

THE CHAIR:

Roll call vote will be had. Roll call vote will be had. Mr. Clerk, will you please call for a roll call 0 vote on the bill. The machine is open.

CLERK:

+mmediate roll call has been ordered in the Senate. Immediate roll call has been ordered in the Senate.

[pause]

THE CHAIR:

If all members have voted, all members have voted. The machine will be closed. Mr. Clerk, will you please call a tally.

CLERK:

Senate Bill 976

Total Number Voting 35 Necessary for Passage 18 0 Those voting Yea 34 002686 /tl 22 SENATE May 30, 2015

Those voting Nay 1 0 Absent/not voting 1 THE CHAIR:

The bill passes. [gavel] Wanna go - do the tally. Continue now, Mr. Clerk.

CLERK:

On Page 31, Calendar 274, Senate Bill No. 1085, an ACT CONCERNING HEALTH INSURANCE COVERAGE FOR MENTAL AND NERVOUS CONDITIONS AS AMENDED BY SENATE AMENDMENT SCHEDULE A FAVORABLE REPORT OF THE COMMITTEE ON INSURANCE.

THE CHAIR:

Good afternoon, Senator Crisco.

SENATOR CRISCO:

Good afternoon, Madam President. I move to accept the Joint Committee's Favorable Report and passage of the 0 bill. THE CHAIR:

Motion's on acceptance and passage. Will you remark, sir?

SENATOR CRISCO:

Yes, Madam President. Madam President, the Clerk has an amendment I believe is 8579. I request that it be called and I be given permission to summarize.

THE CHAIR:

Mr. Clerk.

CLERK:

LCO No. 8579, .Senate A, offered by Senator Crisco and Bye. 0 THE CHAIR: JOINT STANDING COMMITTEE HEARINGS

GENERAL LAW PART 3 861 – 1203

2015

001001 46 March 5, 2015 rgd/cd GENERAL LAW COMMITTEE 2:00 P.M.

the hook and we could all go eat at Paisano's without a gift card and we won't buy any while we're there -- but actually we would. That is Tony's restaurant in Waterbury, is it? And they do have very good food, so here's a commercial for you, Tony.

But I was just thinking that maybe we should just -- maybe you should consider give thought to just going with the chain operations and see what happens, and the little mom and pop restaurants and grocery stores and that kind of thing would be alleviated from the expense at this time and see how that works. Too bad Senator Witkos left. Okay. Bye-bye now.

REP. MILLER: Thank you for that suggestion, Representative Orange.

SENATOR LEONE: Are there any further questions? If not, thank you, Representative, for taking the time to answer all the questions. I'm sure you'll be having some fun conversations going forward. Happy to help, and we'll see you next time.

REP. MILLER: Thank you very much for allowing me to testify.

SENATOR LEONE: Thank you. With that we will now move into the public domain. Next up is Jay Mullarkey followed by Ross Hollander.

Please press the button.

JAY MULLARKEY: Good afternoon, Senator Leone, Representative Baram and members of the General Law Committee. My name is Jay Mullarkey. I'm the Vice President of Ticket Network located in South Windsor. I urge your support of Raised Bill Number 976 because it directs Commissioner Harris and the Department of consumer 001002 47 March 5, 2015 rgd/cd GENERAL LAW COMMITTEE 2:00 P.M.

Protection to study practices in the entertainment ticketing industry that hurt 0 Connecticut consumers.

Such a study is an important first step towards establishing fair rules that protect consumers and fans from venues and teams that unreasonably monopolistically restrict ticket sales. The DCP study should address at a minimum the following three questions.

Are Connecticut's season and subscription ticket holders better off if they are restricted from selling their tickets to an event they don't want to or can't attend? Are Connecticut consumers better off if they are denied access to the events that bought tickets to just because they didn't buy their tickets directly from the venue or team? And are Connecticut consumers better off if they can only buy tickets in a form that can't be easily transferred when easily transferable tickets are available and the transfer is feasible?

I'm confident that the DCP and Commissioner Harris will find that consumers are hurt when venues and teams are allowed to impose unfair restrictions on how tickets are used and sold. More importantly, this committee and your colleagues in the General Assembly will learn the extent of which Connecticut's residents are burdened by these needless restrictions and see I how easy and reasonable a commonsense solution could be. I

' ' An event ticket should be an opportunity, the I chance to attend a great performance, give a wonderful gift or make what might have been a I regular night memorable. When the ticket market is unfairly restricted event tickets become burdens, hassles and ruin potential. I ~ This committee and Commissioner Harris and the l j 1 1 0 001003 48 March 5, 2015 rgd/cd GENERAL LAW COMMITTEE 2:00 P.M.

DCP can help prevent that. Please report Raised Bill Number 976 favorable, and I welcome all your questions.

SENATOR LEONE: Thank you. Are there any questions? Thank you, Jay, for your testimony. I know this has been an ongoing issue and I think having a study to flesh out some of the facts will be very helpful for this committee to consider when the report is done, so we appreciate your time.

JAY MULLARKEY: Thank you.

SENATOR LEONE: Thank you. Next Ross Hollander followed by Reverend Boise Kimber.

ROSS HOLLANDER: Chairman Leone, Chairman Baram, distinguished members of the General Law Committee, my name is Ross Hollander and I am here to represent Hartford Distributors in Manchester and its 215 employees and families, a majority of whom are members of Teamsters 1035 in South Windsor.

My purpose today is to ask for your support for House Bill 6858, a Study of Alcohol or Liquor Floor Stock Allowances and Depletion Allowances. As a practical matter, depletion of floor stock allowances, or manufacturers rebates, a common practice in every commercial relationship that you can think of, including wines and spirits in Connecticut. The only system in place today to allow brewers to participate in price promotions with wholesalers is to lower their price to us for a finite period of time prior to the sale. This system requires us to forecast what we will sell well in advance of the promotion and to pay the consequences of any miscalculations.

It is also very inefficient for everyone. The 001006 51 March 5, 2015 rgd/cd GENERAL LAW COMMITTEE 2:00 P.M.

ROSS HOLLANDER: Thank you.

0 SENATOR LEONE: Thank you, Representative. I concur with that statement. We look forward to this study when it's completed. Thank you.

ROSS HOLLANDER: Thank you very much.

SENATOR LEONE: Next, Reverend Boise Kimber and followed by Jack Baker.

BOISE KIMBER: Good afternoon, Senator Leone and Representative Baram. I am Reverend Dr. Boise Kimber, the Pastor of the First Calvary Baptist Church in New Haven, and our second location is in Hartford. I'm also the President of the Connecticut Missionary Baptist State Convention that has over 80 churches throughout the state of Connecticut.

I've come to talk to you and to thank you for really looking at Raised Bill Number 976 in reference to ticketing, but I believe that you can do more than just look at this bill. I 0 would like for you to consider the fact that what is there now is disenfranchising the people whom I served throughout this state. Many of these individuals are your voters across this state.

Number one is that this committee can restrict sellers from requiring credit cards. A lot of people whom I serve do not even have a credit card. They may have other debit cards or they may have cash, but they do not have a credit card to purchase tickets throughout -- for events. There is a problem with the paperless tickets also that individuals have to have the paperless ticket in order to pick up their tickets. And so I have come to you today to share with you in reference to where the pain is of individuals who desire to go to events

0 001007 52 March 5, 2015 rgd/cd GENERAL LAW COMMITTEE 2:00 P.M.

and cannot go to these events based on the fact that they do not have a credit card to go to these events.

Now, you know, I know this committee does a lot of studying of bills. There's been a lot of studies done in the community in where I pastor. I would like for this committee to certainly look at the protection of consumers in this state. One, eliminate the ability of ticket sellers to require credit cards for purchasing and picking up tickets. Two, allow for paperless only when the purchase of such tickets are offering the option. And so I ask that you would certainly move this bill along and that this bill should not sit in your committee the remaining of this year because it does not allow people who really would like to go to these events and that have to give a credit card.

And so I will be continually pushing this bill because it is a bill that hurts people. And I know that you are concerned about your constituency and that people's rights are being violated on the fact that they are not able to purchase ticket unless they have a credit card.

SENATOR LEONE: Thank you, Reverend. Quick question. When you say to eliminate the ability of ticket sellers to require the credit cards for the purchase, am I -- I'm sort of inferring that you don't mean strictly purchasing with credit cards. It would allow someone who has a credit card to purchase it if they had a credit card, but also to accept cash if they did not have a credit card.

BOISE KIMBER: Other options.

SENATOR LEONE: Okay. Because the way I read it you're eliminating credit cards and I don't 001008 53 March 5, 2015 rgd/cd GENERAL LAW COMMITTEE 2:00 P.M.

think that's what you want.

0 BOISE KIMBER: No. No. Not eliminating credit cards, but there are other options and other forms. SENATOR LEONE: Right. So if they don't have a credit card they should be able to use cash to purchase.

BOISE KIMBER: Yes.

SENATOR LEONE: Okay. I just wanted to make sure I was reading it clearly. Mr. Chairman.

REP. BARAM: Thank you. I want to thank you for your testimony. You raise a number of good points that I think have been on the minds of many committee members for a long time. I know that, you know, we have received information that sometimes conflicts on this issue of tickets and one of the reasons for doing a study was to try and get objective information that's accurate and truthful so that we can make decisions.

0 A couple of years ago the issue became so heated that we had different venues coming and testifying, giving us different information and pointing fingers at each other and the like. And. I think it created so much turmoil that the committee ended up doing nothing because we weren't sure exactly what the correct information is. So I'm hopeful that by sending this to the Department of Consumer Protection to do an objective study and hopefully make recommendations it will give us guidance for going forward.

And clearly, you know, a number of the issues you raised are ones that I think many of us are concerned with. And just to give you one more assurance, as long as I've been on the

0 001009 54 March 5, 2015 rgd/cd GENERAL LAW COMMITTEE 2:00 P.M.

committee we don't refer a lot of bills for study, but those that do usually move forward when we get the study back. They're not put on a shelf and forgotten. They usually give us a platform to step forward and tackle the issue, so I'm hoping that's what will happen in this case. Thank you very much.

BOISE KIMBER: Well, with your help and your persistence that this bill will not sit on the shelf, that you can recommend this bill to the Department of Consumer Protection on today.

SENATOR LEONE: Will do. And Reverend, and please share that information with the Commissioner as well as when we get this study moving that you make sure that that actual data that you have is part of that conversation. That will be very important.

BOISE KIMBER: Thank you very much.

SENATOR LEONE: Thank you. Any other questions? If not, thank you.

Next, Jack Baker, followed by Tim Adams.

JACK BAKER: Good afternoon, Senator Leone and representative Baram and members of the General Law Committee. Thank you for raising Senate Bill 977.

My name is Jack Baker and I'm here today in the capacity as an owner of Hardscrabble Distillery. In June of last year we purchased a 15,000 square-foot building on Route 202 in Litchfield, Connecticut. Since then we have been busy rehabilitating the building and installing distillation equipment. Thus far we have invested well over a million dollars, much of it going to local tradespeople and local suppliers. 001144

"! ticketnetwork March 5, 2015

Testimony in Support of Raised Bill No. 976 AN ACT CONCERNING A STUDY OF THE FAIR SALE OF TICKETS TO ENTERTAINMENT EVENTS

Submitted by Jay Mullarkey, Vice President, TicketNetwork

Senator Leone, Representative Baram, and members of the General Law Committee,

I urge your support of Raised Bill No. 976 because it directs Commissioner Harris and the Department of Consumer Protection (DCP) to study practices in the entertainment ticketing industry that hurt Connecticut's consumers. Such a study is an important first step toward establishing fair rules that protect consumers and fans from the venues, teams, and promoters that unreasonably and monopolistically restrict ticket sales.

The DCP's study should address, at a minimum, the following three questions:

Are Connecticut's season and subscription ticket holders better off if they are restricted from selling their tickets to an event they don't want to or can't attend? c Are Connecticut's consumers better off if they are denied access to the events they've bought tickets to, just because they didn't buy their tickets directly from the venue or team?

Are Connecticut's consumers better off if they can only buy tickets in a form that can't be easily transferred, when easily transferrable tickets are available and the transfer is feasible?

I'm confident that the DCP and Commissioner Harris will find that consumers are hurt when venues, teams, and promoters are allowed to impose unfair restrictions on how tickets are used and sold. More importantly, this committee and your colleagues in the General Assembly will learn the extent to which Connecticut's residents are burdened by these needless restrictions and see how easy and reaso~able a common sense solution would be.

An event ticket should be an opportunity-the chance to attend a great performance, give a wonderful gift, or make what would have been a regular night memorable. When the ticket market is unfairly restricted, event tickets become burdens, hassles, and ruined potential. This committee, Commissioner Harris, and the DCP can help prevent that.

Please report Raised Bill No. 9776 favorably.

I welcome your questions. Please contact me at 860.644.4000 x1212 or at [email protected].

Jay Mullarkey

TicketNetwork® is a leading provider of innovative technology for event ticket buyers and sellers. 0 With headquarters in South Windsor, CT, TicketNetwork and its sister companies employ over 500 people and are a 2015 Glassdoor Best Place to Work.

75 Gerber Road East I South Windsor, CT 060741 P: +1.860.644.4000 1 corporate.ticketnetwork.com 001145 c

TESTIMONY REGARDING SB 976,

AN ACT CONCERNING A STUDY OF THE FAIR SALE OF TICKETS TO ENTERTAINMENT EVENTS

The Connecticut Sports & Entertainment Industry Coalition consists of the following organizations: CAPA - Shubert Theatre, Fans First Coalition, Feld Entertainment, Inc., Feld Motor Sports®(including Monster Jam®, Monster Energy® Supercross, Nuclear Cowboyz, AMSOIL Arenacross), IAVM International Association of Venue Managers, Live Nation Entertainment, Inc. (Artist Nation, Live Nation, Ticketmaster), Northwest Connecticut Association for the Arts, Inc. d/b/a Warner Theater, Oakdale Theatre, Premier Concerts I PKM Presents LLC, Red Light Management, Ringling Bros. and Barnum & Bailey®, The Broadway League, Inc., The Bushnell Center for the Performing Arts, Toad's Place - New Haven, and Xfinity Theatre. We submit this testimony regarding SB 976, An Act Concerning a Study of the Fah Sale uf Tlckd:s· lo E1·1tertalmuent Events. In 2011, legislation was brought before the General Law Committee addressing the very issues that are the subject of HB 6298, An Act Concerning The Fair Sale Of Tickets To Entertainment Events. After an intense lobbying campaign from both sides of the industry, the Chairs of the General Law Committee formally requested the Commissioner of the Department of Consumer Protection to study. In the beginning of 2012, the Commissioner released that report and it is attached as Exhibit A to this testimony (the "Rubenstein Study"). The Rubenstein Study was widely hailed throughout the industry nationally and it positioned the State of Connecticut as a thought leader among states on this topic. During the course of the study, the Department learned of possible abuses and misconduct in the secondary marketplace in Connecticut. That led to an extensive investigation by the Department of the secondary marketplace. In July 2014, the Department, in conjunction c with the Office of the Attorney General of Connecticut and the Federal Trade Commission, announced it had entered into a consent agreement with four parties (the "Rubenstein Consent Agreement"). That consent 001146 c agreement is attached as Exhibit B to this testimony. We do not yet know the full outcome of the actions taken by CT Consumer Protection as the effects of the new regulations continues to ripple through the industry. We have seen many brokers take the new regulations to heart and respect them. But we have also seen many brokers simply find new ways to circumvent the intent of the new regulations, while continuing to deceive consumers. The Coalition would not object to further study of the secondary markets and brokers so long as the objective is to strengthen consumer protection. However, this study may be premature for two reasons. First, the Rubenstein Consent Agreement is only months old and it would be prudent to see how it will influence the behavior of brokers. Thus far, we have seen many brokers modify their behavior to comply with spirit of the Agreement while others continue to seek ways to circumvent it. Second, technology is rapidly evolving, enabling promoters and venues even more options to protect consumers. If the Committee were to ask the Department to conduct another . study, the range should go beyond the topics in the current version of the bill and include the fo1lowing: · 1. Should brokers be allowed to offer tickets for sale that they have not already purchased? 2. Should brokers be allowed to offer tickets for sale-not only that they have not already purchased-but tickets that are not even on sale to anyone? 3. Should there be a specified "broker blackout period" of 72 hours after tickets are officially put on sale to the general public during which brokers are forbidden to purchase tickets with the sole intent of reselling them at a much higher price? 4. Should sales tax apply when a broker resells a ticket to a customer? 5. A review of Web Robot Software (BOTs) that allows applications to run auto tasks over the internet. c 6. A review of deceptive website marketing. 7. A review of seller disclosure that includes entities who do not disclose their resale practices. 001147

In summary, it is our recommendation to set aside SB 976 until we better understand how the industry is adapting to the post-Rubenstein Consent Agreement world and how evolving technology will help the industry employ more safeguards.

2

c

0 001156 c

STATE OF CONNECTICUT DEPARTMENT OF CONSUMER PROTECTION 165 CAPITOL AVENUE, HARTFORD, CoNNBcrrcuT o6ro6

WILLIAM M. RUBENSTEIN PANNEL P. MALLOY COMMISSIONER GOVERNOR February 22, 2012

The Hon. Paul Doyle, State Senator The Hon. Kevin Witkos, State Senator Co-Chtiir, General Law Committee Ranking Member, General Law Committee Legislative Office Building Legislative Office Building Hartfor~, CT 06106 Hartford, CT 06106

The Hon. Joe Taborsak, State Representative The Hon. Rosa Re.bimbas, State Representative c Co-Chair, General Law Committee Ranking Member, General Law Committee Legislative Office Building Legislative Office Building H~rtford, CT 06106 Hartford. CT 06106

Dear Honorable Chairs and Ranking Members:

On April 25, 2011, you requested our assistance in researching the underlying issues having to do with H.B. 6298 (2011), An Act Concerning the Fair Sale ofTickets to Entertainment Events. Specifically, you requested that this Department provide an objective analysis of the manner in which event tickets are sold in Connecticut and the • ways in which consumers are impacted by ctirrent ticket selling practices.

As part of its review, the Department consulted with. representatives from a wide spectrum of entities that touch the ticket sale and distribution process, in ·both the primary and secondary ticket markets. We consulted with promoters, venues, sponsors, primary ticketing service providers, payment system companies, online search engine companies, ticket brokers, online secondary ticket exchanges ·and consumers. The Department evaluated the entire ticket purchase experience from the initial ticket search, most often conducted through online searching, through the ticket sale transaction by the ultimate event attendee. Also, in furtherance of its review, the Department thoroughly reviewed complaints received from consumers, venues, the Better Business Bureau and other agencies. 0

Telephone (860)"713-6050 • Web Site: www.ct.gov/dcp/ An Ajfim1ativt Action • Equal Opportunity Emp~ytr 001157 c

Page2, February 22,2012

Below we set out an overview of the current practices in both the primary and secondary ticket markets that impact the ticket purchasing experience for consumers. Included is a stunmary and discussion of the types of complaints the Department reviewed. We discuss areas of concern in both the primary and secondary ticket markets. We conclude with a discussion of the adequacy of existing laws to address these areas of concern. Finally; we conclude that legislative changes are not currently necessary to address the areas of concern that we have identified. ·

Overview of Current Practices and Consumer ~mpact

At the outset, we want to be clear about o~ use of the term "consumer" in the context of this discussion. There are two main types of ticket purchasers: (1) those who purchase and resell; and (2) those who purchase a:(ld attend the event. We refer to the first type of purchaser as a "broker" or "reseller" 4nd we refer to the latter type as a "consumer." Brokers and consumers often compqte with each other for ticket purchases in both the primary and secondary ticket markets. i Although brokers deserve fair opportunities, our primary concern is to assure thJt the ticket markets operate for the ultimate benefit of consumers.

Broadly speaking, most consumer ticket purchases generally begin with an online search for an event or ticket, and end ·with a sales transaction in either the primary or secondary ticket market. The search process and each market are discussed below.

The Ticket Search

A popular method that consumers use to search for tickets to an event is by conducting an internet search on a Web search engine such as Google or Bing. For a specific event at a Connecticut venue such as The Bushnell, for instance, a consumer may typically type a search string of words describing the desired event and venue. For example, a consumer may enter a search string such as '~ersey boys bushnell hartford", or something similar. The first results a consumer would typically see are paid advertisements, or "Sponsored Links", either at the top of the search results page in a shaded section, or along the side oftbe web page. Below the shaded section ofprud ads, the consumer finds the natural search results of the inquiry. For example:

0 001158

Page 3, February 22,2012

Jersey boyt buthneo hartford Go ogle ..,,·S~hl . -

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Primmy Ticket Market

Tickets to events are initially offered by either the event promoter or the venue at which the event will take place. This initial ticket sale takes place in what is known as the primary ticket mar~et. While there are exceptions and anomalies, ticket sales in the primary ticket market are typically sold at face value through, or by arrangement with, the venue's bo:x: office .. Constimers can access the primary market by visiting the physical box office at venues such as the XL Center, The Bushnell, Mohegan Sun Arena, and Foxwoods Resort Casino, or online through the venue's official online site, such as www.xlcenter.com. www.bushnell.org, www.mohegansun.com, or www.foxwoods.com. Tickets in the primary ticket market are also often sold through a private entity contracted to print, offer and sell tickets to the public at face value. Ticketmaster, for example, is a well-known private entity that is often contracted to provide such ticketing services on· behalf of a venue, in the primary ticket market. 0 001159 c

Page 4, February 22, 2012

Sellers in the primary ticket market often announce the availability of tickets in advance of the event date. The date on which tickets will be available to all members of the public is known as the "public on-sale date."

The number of tickets actually available for sale on the public on-sale date for a particular event is the result of a number of factors. While the seating capacity of the venue provides the starting point, venues may "hold back" tickets due to stage configuration or other considerations that require certain seats be sold before others. Tickets may also be subject to hold-back for promotional or personal use by the promoters, the v~nue, eve.nt sponsors or the !Utists. H;old-backs may be released after the public on-sale date, sometimes making tickets available after consumers have been told that the event sold out.

In addition to hold-backs, the availability of tickets on the public on-sale date are affected by "pre-sales.'' Pre-sales occiur when tickets are made available, prior to the public on-sale date, to a variety of sp~cial privilege purchasers such as official fan clubs, c sponsor's customers and other membership or select groups. Hold-backs and pre-sales both reduce the number of tickets available on the public on-sale date and, therefore, have a directitnpact ·on the general public'·s ability to access tickets in the primary ticket··-~ market.

We have not done a full study to detennine the precise percentages of tickets available on the public on-sale date. However, our review of a sampling of sell-out or near sell-out events at Connecticut venues indicates that the vast majority of tickets are typically available to the public on the public on-sale date. Nonetheless, a significant number of tickets are subject to hold-backs and pre-sales.

The extent to which tickets are available on the public on-sale date can be important information to consumers. Armed with such information, a consumer could make a choice of whether to wait for the public on-sale date or attempt to participate in the pre-sale by joining a group to whom pre-sale is offered.- Similarly, a consumer may forego purchase on the public on-sale date in the hope that a hold-back ticket will be released for sale at a later date.

Professional ticket brokers and resellers who purchase tickets in the primary market with the intent of reselling in the SC9ondary market also have· a direct impact on the general public's ability to access tickets. Professional resellers may utilize automated systems ("hots") or a legion of employees to resen1e and purchase large quantities of tickets at the onset of the initial public on-sale. Similarly, professional resellers may join fan clubs and other pre-sale eligible groups and purchase tickets before they are available c to consumers on the public on-sale date. These efforts have a direct impact- on the general public's ability to access tickets in the primary ticket market. Brokers' 001160 c

Page 5, February 22,2012 . participation in purchasing tickets in the primary ticket market compete with consumers seeking to purchase the same tickets and, dep~nding on the degree of such activity,.may crowd out consumers from being able to make those purchases. These disappointed consumers may then turn to the secondary market to purchase tickets from the same brokers.

the primary ticket market sellers have recently been experimenting with ticket sales techniques that·seek to discourage brokers from competing with consumers for tickets. Among the rationales posited by primary ticket sellers for these techniques are: (1) to give preference for tickets in the primary market at face-value to fans, i.e. purchasers· who want tq actually atteQd the event; and (2) to Iceep tick~t prices to consumers low so that consumers will be able to afford to attend other shows, thereby expanding the number of events available at the venue. ·

One of these experimental techniques is known as "paperless tickets." While there are variations in this technique, in a typical paperless ticket transaction, no ticket is issued. Rather, the purchaser's name and credit card information is placed o~ a list at the venue. At the time of the event, the purchaser must appear at the venue and show the credit card used for the transaction in order to be admitted to the event. The nature of this transaction makes it difficult to transfer the "ticket" to someone other than the initial purchru:e;. Aithou&il. we 'h.ave heard anecdol;ally or the use of similar techniques iD. oilier states, we are aware of only one such paperless ticket event in Connecticut in the past several years.

Secondary Ticket Market

Tickets to events and shows are also offered to the public by way of the secondary ticket market through ticket resellers. While resellers in the secondary market were once referred to as "scalpers," that pejorative term is anachronistic and inappropriate. We refer to resellers in this market as brokers or ticket resellers. ·

Tickets become available on the secondary ticket market for two main reasons - either the original ticket purchasers finds they cannot attend the show or has purchased more tickets than they can use, or profit seeking by professional ticket brokers and resellers who purchased ·with the intent to resell. Our understanding from the major secondary ticket exchanges is that the vast majority of tickets for events such as concerts and shows are sold by.professional brokers and ticket resellers. A majority of the tickets offered on the secondary ticket market are priced above face value.

The secondary ticket market serves an important role in distributing tickets to consumers. The secondary ticket market can ~reate several benefits to both consumers c and to venues and promoters. First, the secondary ticket market can provide an efficient 001161

0

Page 6, February 22,2012

mechanism to provide consumers with access to a large number of competing sellers. Second, some consumers do not desire to participate in the primary market for a variety for reasons. These consumers may find it inconvenient to be available to make the purchase when tickets go on sale in the primary market. Or, they make a decision to attend an event after most or all tickets have been sold in the primary market. Or, they desire better tickets than they were able to obtain on-the primary market. For these consumers, the secondary market provides a desired service. A third benefit is the secondary market's ability to reduce a venue's or promoter's risk that their tickets will actually sell. These venues or promoters may be happy to have brokers snap up large numbers of tickets and assure that the event is a financial success. The risk of reselling the tic~ets to consumers is transferred tQ the .brokers who have takep the risk that such resales will occur. The off-loading of this risk to the secondary market can have the effect of encouraging venues and promoters to invest in additional events. The secondary ticket market is c~pable of creating other efficiencies ~ well. ·

Today, the secondary ticket market exists primarily online. There are several distinct participants in the secondary ticket market. At one end of the transaction there is the consumer, the person hoping to get a ticket to attend an event. At the other end of the transaction is the ticket broker who holds a ticket or will attempt to procure a ticket for the c-.onsumer .. 'In between, are entities known as "tkketmarketplaces" or "ticket exchanges." Ticket exchanges create a mechanism to connect the consumer to the broker. Among the largest exchanges are StubHub (an E-bay affiliate), TicketsNow (a Ticketmaster/Live Nation affiliate) and TicketNetwork. Other secondary market participants include entities that attract consumers on the internet and deliver the consumer to one of the exchanges for a fee. These entities are often called "partners" or "affiliates" by the exchanges that pay them to deliver consumers. Each of the exchanges uses different models and arrangements with their partners to increas.e consumer traffic through the exchange. As described below, certain of these partner arrangements are of gr~at concern to the Department.

Like the primary market, the secondary market is often accessed by way of an oriline·search, as sho\\'11 above. Consumers can also access the ticket exchanges directly by entering the exchange's domain name directly into the address bar of the internet browser. Well-known domain ~ames for direct access to ex.changes include 'vww.stubhub.com, www.ticketsnow.com and www.ticketnetwork.com. Examples of the numerous independent websites that turned up in online searches for Connecticut event tickets at the time of our review, and that primarily drive traffic through a ticket exchange as partners or affiliates, are www.mohegan.sun.arena.com, ·www.xl.center­ tickets.com, ww-.v. bushnell. theatre.org, W\\'W. websterbank.arena-tickets.org, WW\\'.xl.centerbartford.com, just to name !l few. Such secondary ticket market websites acting as partners for an exchange are not connected to any venue or artist. Due to the c use of actual venue names in the domain names, however, consumers may not realize 001162

Page 7, February 22, 2012

they are purchasing a ticket from a broker and not purchasing from the official box office website. This confusion directly impacts the public's ticket-buying ex~erience.

In a. typical secondary market transaction, a consumer will connect with an exchange, either directly or through a partner. The exchange will provide a listing provided by brokers offering to sell the consumer tickets for particular events. Prices for similar tic~ets being offered for the same event often var}r and are often well above face value. The ticket prices on the ~xchanges are set by the broker offering the ticket. In addition to providing the listing, the exchange typically offers additional services, which vary .from exchange to exchange, arid sometimes different services on the same exchange . that \;'ary (lepending on the' Qroker or partner that is .also involved in the trapsaction .. Among these additional services are fulfillment services, payment services and varying guarantees of ticket availability and authenticity.

Exchanges charge fees to consumers over and above the ticket price ~ffered. Exchanges also charge fees to brokers for use of the exchange. Exchanges pay partners for driving traffic to the. exchange. Exchanges pay partners in a variety of ways. Some exchanges pay flat fees, others pay a percentage of the sale, ~till othe~s allow partners to charge their own fees directly to the consumer. · ·

After a cons\1Il1ei' makes payment' through the exchange, the broker is obligated to provide the ticket to the consumer. In some transactions, the ticket is transferred to the consumer immediately. In other transactions the tickets may not be delivered for several weeks. Occasionally tickets are not delivered at all. . . Consumer Complaints

Over the last year, the Department received 122 complaints about ticket sales. The Department receives complaints directly and from the Connecticut Better Business Bureau, which forwards to us complaints that it receives. Of the 122 complaints, two concerned the primacy ticket market and 120 concerned the secondary ticket market.

In the primary ticket mark~t. one complaint was about an incorrect advertising of· the public on-sale date and the other involved the failure to deliver elements of a premium package that was purchased along with the tickets.

The 120 complaints in the secondary ticket market largely centered on confusion by. consumers about the nature of the transaction, the insufficient disclosure of terms and conditions and sale of tickets through exchanges where the broker did not have the tickets at the time of sale. We cannot break out the complaints into the categories that you delineated in your inquiry because most consumers complained abOut a multitude of problems and frustrations in the same transaction. We will however, summarize the 0 prevalent problems that cut across the majority of the complaints about the secondary 001163

Page 8, February 22,2012

ticket market. Regardless of how the complaints were articulated, it was clear that those consumers who complained to us did not understand the nature of the transaction.

Many consumers complained that they were unaware that they were paying above face value for the tickets that they purchased or the nature of add-on fees. In many instances consumers were very specific about why they were unaware that they were paying above face values. They told us that they believed that they were purchasing directly from the venue in the primary ticket market because of the look and feel of the · websites. Domain addresses often included the name of the venue, event or artist and the sites displayed prominent banners naming the venue on their initial web pages as well as a depiction of the arepa with s~ating. Examples of th~ domain names that these consumers accessed were www.comcast.theatrehartford.com,· · wv-.rw.comcast.theatreboxoffices.com, '""\rw.mohegansun.arenaboxoffice.com, W..vw.mohegansun.arena-ct.com, \\1\vw.xl.centerhartford.com and www.hartford­ xl.centerboxoffice.org. None of these websites are affiliated with a venue, but rather, drive ticket sales through a second'ary market ticket exchange .. c Other consumers complahied that they often did not know the total price of the tickets and associated fees prior to purchase. Some consumers said that fees were not disclosed until after .the vendor secure4 payn;tent.. Oth~ consumers complained that the transaction costs were not reasonable based upon the service rendered. Consumers complained that disclosure about fees, ticket face values and refunds were buried in several pages of sniall print terms and conditions that were not conspicuous. When the consumers sought recourse through an e:x.change, the exchange either disavowed any responsibility for the sale referring the consumer instead to the broker who used the exchange or the exchange informed the consumer that they were oound by the inconspicuous terms and conditions and no refund was issued to the consumer.

Consumers also complained because tickets being offered through secondary market exchanges were not within the inventory of the ticket reseller. Rather) these tickets were "speculative." After the broker sold the consumer a ticket, the reseller would only then seek to obtain the ticket. The consumers were unaware that they broker did not have the ti~ket to sell and indicated that they would not have purchased the ticket had they been aware.

A few of the 120 secondary ticket market complaints do not involve ticket exchanges at all. These complaints ~ncemed fraudsters who created fake websites or posted solicitations on sites like Craigs.list and who never intended to provide tickets at all. 001164

Page 9, February 22, 2012

The Department's Primary Areas of Concern

In our review of the ticket markets, we have developeci areas of concern in both the primary ticket market and the secondary ticket-market.

In the primary ticket market, we have concerns about adequate disclosure of the availability of tickets on the public on-sale date. The significance of such information to consumers, however, will vary depending on the degree of public on-sale date availability. We also have some concerns over whether techniques such as paperless tickets strike a proper balance between the legitimate interests of artists, promoters and venues on the pne hand, and consumers on the other. However, we have r~eived ·an extremely small number of consumer complaints about the priplary ticket market.

Iri. the secondary ticket market, our three primary areas of concern are: (1) deception that causes consumers to believe that they are purchasing in the primary market when they are actually purchasing in the secondary market, including use of deceptive domain names and deceptive site layouts; (2) inadequate dis~losures of the terms and conditioll$ of the transactions; and (3) speculative ticket sales in the secondary market without adequate disclosure to the consumer about the additional risks of such transactions or the value of the offer. Of these concerns, the first and third deserve more detailed ·discussion. · · · · · · ·

Deception creating confusion with the venue box office is the area of most concern, as reflected ·in the complaints discussed earlier. Independent websites with internet domain names. that are designed to confuse consumers and site layouts that resemble official venue sites are practices that stood out throughout the course of our review.

As shown by the number and consistency in the complaints reviewed, consumers are often deceived by independent websites with domain names that include the name of the venue, or an intentionally misspelled version of the same. Consumers believe they are purchasing directly from the official box office website of the venue and that the tickets are being offered at the face value price; they are not aware that they are purchasing from a ticket reseller in the secondary ticket market at an inflated price. These websites, run by ticket exchange partners,_ use layouts that further the deception by prominently displaying the name of the venue at the top of the site, with a seating chart and narrative description of the venue often copied directly from the official website. At the time of our review, we found that disclosures regarding the website's lack of affiliation with the box office and its reseller status are frequently non-existent, unclear, or inconspicuously displayed.

We want to be clear that these practices are not unifonnly utilized by ticket 0 exchanges. But some ticket exchanges do allow independent sites with deceptive domain 001165

Page 10, February 22, 2012

names and website layoutS to be partners or affiliates. There is strong incentive to do this, as such deceptive websites naturally drive more traffic to affiliated exchanges, in tum generating more sales. 'This deception comes af the direct expense of not only the duped consumer, but also the venue that is confi.'onted by that consumer when they realize they paid significantly above face value for tickets they thought they had purchased from the venue's own ,,_iebsite. The venue is left with an unhappy customer, through no fault of its ovvn. ·

Ticket exchanges should not pennit partners and affiliates to use deceptive domain names - domains that include the name of a venue or a misspelled version of the same, for example, or deceptively designed website pages - and all ticket reseller websites need to clearly and conspicuously disclose that they are not affiliated with any venue or box office, that they are ticket resellers, and that the tickets offered are priced above-face value when that is the case.

Speculative ticket sales in the secondary market are also an area of concern. Speculative tickets are those tickets that the broker offers for sale, and sells, when the broker neither has the ticket in-hand, nor has the right to that ticket at the time of the sale. Many ticket exchange listings do not clearly and conspicuously disclose when the tickets offered for salcan~.speculative tickets. Because ~£thi-s lack of disclo~ure, the consumer.·· . ·. is often not aware that the broker is only offering to seek to obtain the ticket on the consumer's behalf. If the broker is not successful, the consumer may not get a ticket at all. While exchanges often refund a consumer when that happens, that is cold comfort for the consumer. When a "hot" event is involved, the consumer is usually faced with the choice of not going to the event at all or reentering the market at time when there is a decreased supply of tickets and presumably an increased ticket price. ·

Speculative tickets also can present a problem when there are still plenty of tickets available at the box office. Our review uncovered a highly nefarious speculative ticket practice that combines speculative ticket sales with the practice of deceiving the consumer into thinking that they are dealing ·with the box office. The scheme works like this: the consumer is deceived into thinking that they are at the official box office website. Yet, in fact, they have arrived at a secondary market website driving traffic through a ticket exchange. The consumer purchases tickets at inflated prices, thinking the price is face value. Incredibly, large numbers of tickets are still available through the box office at the much lower face value. The broker who just sold the consumer a ticket at an inflated price, contacts the official box office of the event, and purchases the ticket at face value, sometimes using a gift card and providing the consumer's naine. In these situations, the consumer is neither aware that they are not purchasing from the box office · . nor that they have paid a highly inflated price to a broker that did not own the tickets and took no risk in procuring them for the consumer. Our review documented a single broker c who, operating through a ticket exchange, utilized this ruse over 300 times in an 18 month period. 001166

Page 11, February 22,2012

Recommendation

Despite ~eas of concern in both the primary ticket market and the secondary ticket market, we believe that additional legislation is not necessary at this time. We believe that the Connecticut Unfair Trade Practices Act ("CUTP N') is robust enough to provide remedy to prevent the types of deceptive practices that we desctibe above. Indeed, as has been widely reported in the press, we have an active investigation ongoing regarding these practices. While it would be imprudent to disclose the details of our investigation at this point, our ultimate resolution of any enforcement action that we may bring will be made public. ·

Although we do not see a need for additional state legislation to appropriately protect consumers against deceptive practices, we do think that changes in federal legislation could aid our enforcement. Currently there is a broad immunity from liability for certain internet providers under the federal Computer Decency Act ("CD A''). Ticket 0 exchanges have claimed that the immunity of the CDA ~:~-pplies to their" activities, and thus, they believe that they are imm.une from application of laws like CUTP A for the exchanges' participation in the deceptive acts of their partners and brokers. We believe the CDA to be inapplicabl~·ba.Sed upon the close intcr-rela:tioiiship between the ··- exchanges, their partners and their brokers. In any event, changes· to Connecticut law will not resolve that issue. ·

Finally, with regard to paperless tickets and other similar techniques, we do not think the practice warrants legislative intervention at this time. We are aware of only a single such event which has occurred in 'connecticut. There is resistance to such practices by venues that find implementation difficult and by some consumers who find it inconvenient. There is no evidence that the practice has gained market acceptance in Connecticut. Moreover, industry news sources report that some primary ticket sellers are experimenting with various similar techniques designed to'achieve the industry's legitimate objectives while alleviating the burden on consumers who, after purchasing the ticket find out that they cannot attend the event. There is no uniform or accepted practice that has taken hold iri. the industry. Thus, although there vo.illlikely be occasional paperless ticket events in Connecticut as the experiments continue, we do not see a swift influx that would necessitate a legislative solutioli. Rather, our recommendation is to a:llow the marketplace to work in the first instance before resorting to legislation. If paperless tickets are not accepted in the market, they will fall of their own weight. If they adapt to a consumer friendly form, then they should not be prevented. Ifthey take hold in consumer unfriendly ways, however, you may then wish to consider appropriate legislation that removes consumer unfriendly restraints while permitting practices that are 001167

Page 12, February 22, 2012·

designed to keep prices as low as possible to consumers who actually want to·attend the event. If that time comes, we would look forward to providing our thoughts on how that might be achieved.

We hope these· thoughts have been helpful.

Sincerely,

~~~~~- William M. Rubenstein c Commissioper of Consumer Protec~ion

··-·---····· ·----·-··--··-·····- ··-··-········--- -···-·--···--- 001168 ,o Case 3:14-cv-01046 Document 3 Filed 07/24/14 Page 1 of 18

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT

FEDERAL TRADE COMMISSION, and STATE OF CONNECTICUT,

Plaintiffs,

v. Case No. 3:14-cv-1046

TICKETNETWORK, INC., a corporation; and Date July 24, 2014 TICKET SOFTWARE, LLC, a limited liability company

Defendants. 0 [STIPULATED! FINAL JUDGMENT AND ORDER FOR PERMANENT INJUNCTION AND OTHER RELIEF AS :ro DEFENDANTS TICKETNETWORK.INC~. ~.· AND TICKET SOFTWARE LLC

Plaintiffs, the Federal Trade Commission ("Commission" or "FTC") and the State of

Connecticut ("State") (collectively "Plaintiffs''), filed a Complaint for Permanent Injunction and

Other Relief against Ticket Network, Inc., a corporation, and Ticket Software LLC, a limited

liability company. The FTC brought its claims pursuant to Section 13(b) of the Federal Trade

Commission Act ("FTC Act"), 15 U.S.C. § 53(b) and the State brought its claims pursuant to the

Connecticut Unfair Trade Practices Act ("CUTPA"), Chapter 735a of the Connecticut General

Statutes, and more particularly for relief in accordance with C.G.S. §§ 42-11 Om and 42-11 Oo for

alleged violations of C.G.S. § 42-11 Ob(a).

Plaintiffs and Defendants TicketNetwork, Inc. and Ticket Software, LLC stipulate to the

entry of this [Stipulated} Final Judgment and Order for Permanent Injunction and Other Relief

("Order") to resolve all matters in dispute in this action between them. c f------001169

Case 3:14-cv-01046 Document 3 Filed 07/24/14 Page 2 of 18

THEREFORE, IT IS ORDERED as follows:

FINDINGS

1. This Court has jurisdiction over this matter.

2. The Complaint alleges that Defendants participated in deceptive acts or practices

in violation of Section 5 of the FTC Act, !5 U.S.C. § 45, and CUTPA, C.G.S. § 42-llOb(a), in

connection with the advertising, marketing, distribution and or sale of Resale Tickets to

consumers.

3. Defendants admit, for purposes of this action only, the facts in the Complaint

i necessary to establish jurisdiction. Because this is a settlement, Defendants neither admit nor

deny any of the other allegations in the Complaint. 0 4. Defendants waive any claim that they may have under the Equal Access to Justice I Act, 28 U.S. C.§ 2412, concerning lhe prosecution of this action through the date ofthis Order, and agree not to ~eek their own costs and attorneys' fees therew1dt::r.

5. The parties waive all rights to appeal or otherwise challenge or contest the

validity of this Order.

ORDER

DEFINITIONS

For the purpose of this Order, the following definitions apply:

1. "Clearly and prominently" means;

a. In print communications, the disclosure shall be presented in a manner that stands

out from the accompanying text, so that it is sufficiently prominent, due to its type

c Page 2 of 18 001170

Case 3:14-cv-01046 Document 3 Filed 07/24/14 Page 3 of 18

size, contrast, location, or other characteristics, for an ordinary consumer to

notice, read, and comprehend it;

b. In communications made through an electronic medium (such as television, video,

radio, and interactive media such as the Internet, online services, and software),

the disclosure shall be presented simultaneously in both the audio and visual

portions of the communication. In any communication presented solely through

visual or audio means, the disclosure shall be made through the same means

through which the communication is presented. In any communication

disseminated by means of an interactive electronic medium such as software, the

Internet, or online services, the disclosure must be unavoidable .. Any audio 0 disclosure shall be delivered in a volume and cadence sufficient for an ordinary consumer to hear and comprehend it. Any visual disclosure shall be presented in

li'rflan'nenhaUtands out in the context in which 'it is presented, so that it is

sufficiently prominent, due to its size and shade, contrast to the background

against which it appears, the length oftime it appears on the screen, and its

location, for an ordinary consumer to notice, read and comprehend it; and

c. Regardless of the medium used to disseminate it, the disclosure shall be in I understandable language and syntax. Nothing contrary to, inconsistent with, ot· in mitigation of the disclosure shall be used in any communication or within any l document linked or referenced therein. I 2. "Defendants" means TicketNetwork, Inc. and Ticket Software, LLC, also doing business I as TicketNetwork Direct, and their successors and assigns. ' Page 3 of 18 001171

c Case 3:14-cv-01046 Document 3 Filed 07/24/14 Page 4 of 18

3. "Face Value" means the price at which the Ticket is offered for sale by the primary

seller in the normal course, including all attendant fees and charges imposed by or

required to be collected by the venue, primary seller, or original ticket issuer, or other

entity authorized by the venue, primary seller, or original ticket issuer, such as, pro-rata

license fees, Ticket package fees, bundled add-on fees, services fees, taxes (state,

municipal, venue renovation, entertainment. or other levies), or any other charges.

4. "Partner Operator" means any operator of a Resale Ticket Site for which Defendants

provide Ticket inventory or Ticket inventory data feeds, process Ticket sales through

Defendants' platform, and routinely provide a material portion of the customer service

l for Ticket orders. 0 5. "Primary Ticket Site" means an Internet webpage or Internet website owned or I! maintained by a venue, primary seller, original ticket issuer, or other entity authorized by 1 ;I tht: venut:, primary seiler, or'oi;iginar ticket issuer to sell TicketS at their current Face l l Value. I 6. "Relevant Complaint" means a written or electronic complaint, independently created

by an individual or representative of an entity, which reasonably can be interpreted as

claiming that a Partner Operator has engaged in conduct violating any of the

requirements in Parts I through III of this Order, whether or not the complaint accurately

identifies the Partner Operator as the responsible party.

7. "Resale Ticket(s)" means any Ticket(s) sold by an individual or entity other than the

venue, primary seller, original ticket issuer, or other entity authorized by the venue,

primary seller, or original Ticket issuer to sell a Ticket at its current Face Value. c Page 4 of 18 001172

Case 3:14-cv-01046 Document 3 Filed 07/24/14 Page 5 of 18

8. "Resale Ticket Site" means an Internet webpage or Internet website whose primary

purpose is the offering of Resale Tickets for sale to the public.

9. "Similar Advertising" means search engine advertisements, Resale Ticket Sites, or other

advertisements that use the same template or otherwise employ substantially similar

physical layouts or placements of images or logos, with the exception of content unique

to the specific venues, events, or performers being advertised.

10. "Ticket(s)" means any paper ticket(s) or electronically transmitted ticket(s) that entitles

the bearer to admission to a live entertainment event, including, but not limited to.

concerts, sporting events or games, theater performances, simulcast events, or exhibits.

I.

PROHIBITED REPRESENTATIONS

IT IS FURTHER ORDERED that Defendants, Defendants' officers, agents, servants,

employees, and attorneys and all other persons in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, in connection with the advertising, marketing, or promotion of Resale Tickets offered for sale through any

Resale Ticket Site owned or operated, in whole or in part, by any Defendant, are permanently restrained and enjoined from:

A. Using the word "official,'' or any phrase containing the word "official,'' such as

official website, official tickets, or official source, including any alternate

spellings thereof, in search engine advertisements, actual or display URL's~

websites, webpages, or any other forms of advertising for Resale Tickets or

Resale Ticket Sites, except to the extent that the word "official" is part of the

Page 5 of 18 ··1------001173 c Case 3:14-cv-01046 Document 3 Filed 07/24/14 Page 6 of 18

name of a venue, stadium, arena, theater, performing arts center, center, event,

tour, performer, or sports team, or where a venue, stadium, arena, theater,

performing arts center, center, event, tour, performer, sports team, primary seller,

or original ticket issuer has authorized the Resale Ticket Site to sell Resale

Tickets on its behalf; or

B. Using the name of any venue, stadium, arena, theater, performing arts center,

center, event, tour, performer, or sports team, including any partial or alternate

spellings thereof, in any actual or display URL in any search engine

advertisement for Resale Tickets or Resale Ticket Sites, except where: (1) such

name is presented only within the subdirectory or sub file portion of such actual or 0 display URL (i.e., after the top level domain and first "f'); or (2) the advertisement containing such actual or display URL clearly indicates through

descriptors, brarid names, business names le.g., '·TicketNetwork'" or

"TicketLiquidator"), the content of the offer, or other means, that the site is a

ticket reseller not affiliated with such venue or other entity; and such advertising

does not otherwise violate Part II of this Order.

II.

PROHIBITION AGAINST MISREPRESENTING RESALE TICKET SITES AS PRIMARY TICKET SITES

IT IS FURTHER ORDERED that Defendants, Defendants' officers, agents, servants,

employees, and attorneys and all other persons in active concert or participation with any of

them, who receive actual notice of this Order. whether acting directly or indirectly, in connection

with the advertising, marketing, or promotion of Resale Tickets offered for sale through any

Page6ofl8

·- -·- -. ··--· ··-~------~·---~ ..... ______- ----···· - 001174

Case 3:14-cv-01046 Document 3 .Filed 07/24/14 Page 7 of 18

Resale Ticket Site owned or operated, in whole or in part, by any Defendant, are permanently

restrained and enjoined from misrepresenting, expressly or by implication, that a Resale Ticket

Site is a Primary Ticket Site or that a Resale Ticket Site is offering tickets at Face Value, unless

authorized by the venue, primary seller, or original ticket issuer, whether through:

A. The use of names (including alternate spellings thereof), images, photos,

depictions, or illustrations of venues, stadiums, arenas, theaters, performing arts

centers, centers, events, tours, performers, or sports teams in search engine

advertisements, actual or display URL' s, websites, webpages, or any other forms

of advertising;

B. The use of terms such as box office, arena, stadium, theater, performing arts

center, or center in any such advertising; or

c. Any other means.

Nothing in this Part shall prohibit the truthful and non:misleading use of any such names, terms,

images, photos, depictions, or illustrations.

III.

PROHIBITION AGAINST FAILING TO DISCLOSE MATERIAL INFORMATION

IT IS FURTHER ORDERED that Defendants, Defendants' officers, agents, servants,

employees, and attorneys and all other persons in active concert or participation with any of

them, who receive actual notice of this Order, whether acting directly or indirectly, in connection

with the advertising, marketing, or promotion of Resale Tickets offered for sale through any

Resale Ticket Site owned or operated, in whole or in part, by any Defendant, arc permanently

restrained and enjoined from failing to disclose, clearly and prominently on (l) the ticket listing

Page 7 of 18 c 001175

c Case 3:14-cv-01046 Document 3 Filed 07/24/14 Page 8 of 18

page (i.e., where specific tickets are offered for sale) and (2) the payment authorization page of such

site, that (a) the site is a resale marketplace and not a venue or box office; (b) the Ticket price may

exceed Face Value; and (c) the site is not owned by the venue, sports team, perfonner, or promoter

(as applicable). Provided that, where a search engine advertisement contains an actual or display

URL that sends a consumer directly to a website that offers tickets to a single venue, performer,

team or event, then such information also shall be disclosed, clearly and prominently, on the

initial page to which users are directed via such search link.

IV.

MONITORING OF PARTNER OPERATORS

IT lS FURTHER ORDERED that Defendants, Defendants' officers, agents, servants,

employees and attorneys, and all other persons in active concert or participation with any of

them, who receive actual notice of this Order, in connection with any Partner Operator's

advertising, marketing, promotion, or sale of Resale Tickets through any Resale Ticket Site,

shall, within sixty (60) days of service of this Order, establish, implement, and thereafter

maintain policies, practices, and procedures that are reasonably designed to ensure that a Partner

Operator does not misrepresent, directly or by implication, whether through an actual or display

URL, website, webpage, search engine advertising, or other advertising or promotion, that a

Resale Ticket Site is a Primary Ticket Site. Such policies, practices, and procedures shall, at a

minimum, consist of:

A. Requiring a Partner Operator to enter into a written agreement which clearly and

prominently states: the requirements of Parts I through III of this Order and the

Partner Operator's obligation to comply therewith; the Partner Operator'S

obligation to take immediate action to correct any violation of the requirements of 0 Page 8 of 18 001176

c Case 3:14-cv-01046 Document 3 Filed 07/24/14 Page 9 of 18

Parts I through III of this Order; and the disciplinary action that Defendants will

take against the Partner Operator for failure to comply;

B. Defendants' implementation and maintenance of a system for receiving and

reviewing Relevant Complaints from customers, brokers, venues, Partner

Operators, promoters, government entities, and Better Business Bureaus or similar

non-profit entities. As a part of this system, Defendants shall require each Partner

Operator and ticket broker doing business with them to promptly forward to

Defendants a copy of each Relevant Complaint they receive from any source.

C. Upon receipt of a Relevant Complaint, promptly providing such complaint to the

Partner Operator responsible for the advertising at issue and notifying the Partner

of its obligation to: correct the violations in the Resale Ticket Site(s) or related

search engine advertisements that are the subject of the complaint; correct any

- .~ .such violations in Similar Advertising; and provide to Defendants :1 wrirten or

electronic certification identifying all such Similar Advertising and affirming that

all such advertising has been corrected.

D. Promptly taking appropriate disciplinary action upon determining that a Partner

Operator has engaged in conduct that violates any of the requirements of Parts I

through Ill of this Order. Appropriate disciplinary action shall incorporate

escalating sanctions including:

1. For a first violation: Defendants shall promptly disable access to Ticket

inventory for the Resale Ticket Site{s) that were the subject of such complaint

until the Partner Operator completes all of the actions required by Part JV.C I herein; Page 9 of 18 0 001177

Case 3:14-cv-01046 Document 3 Filed 07/24/14 Page 10 of 18

2. For a second violation: Where a Partner Operator, within one year of a sanction

imposed for its first violation, engages in a subsequent violation of any

requirement set forth in Pa1ts I through III of this Order, Defendants shall

promptly disable access to Ticket inventory for the Resale Ticket Site(s) that

were the subject of the complaint and require the Operating Partner, within

seven business days, to complete all of the actions required by Part IV.C.

Defendants, upon receipt of the Partner Operator's certification of

compliance, shall disable all Ticket Resale Sites that were the subject of the

second complaint, plus Similar Advertising sites, for a period of two weeks

thereafter. In the event the Partner Operator fails to take such action within

0 seven business days, Defendants shall disable access to Ticket inventory for

all of such Partner Operator's Resale Ticket Sites until it completes all of the

actions required by Part IV.C herein, and shall continue to disable access for a

period of two weeks thereafter.

3. For a third violation: Defendants shall terminate the relationship with a Partner

Operator in the case of a third such offense within one year of a sanction

imposed for the second violation.

In order to allow for a reasonable time period to address complaints about similar conduct

predating the Partner Operator's sanction for a first or second violation, complaints

received about such conduct shall not constitute a ''second'' or "third'' violation for

purposes of this Part. c Page 10 of 18

- ·-·--~---·-· ·---··· ------··---- 001178

c Case 3:14-cv-01046 Document 3 Filed 07/24/14 Page 11 of 18

v.

STATE MONETARY RELIEF

IT IS FURTHER ORDERED that:

A. Defendant shall pay the State of Connecticut Seven Hundred Fifty Thousand

Dollars ($750,000.00) no later than thirty (30) days after the date of entry of this

Judgment. Said settlement payment shall be used by the State for complaint

· resolution programs, consumer education, and consumer protection enforcement

and litigation, and shall be placed in, or applied to, accounts dedicated to those

purposes. Defendant has no right to challenge any actions the State or its

representatives may take pursuant to this Subsection.

B. Defendants relinquish dominion and all legal and equitable right, title, and interest

D in the funds that constitute such payment and may not seek the return of any

portion of such payment.

VI.

ORDER ACKNOWLEDGMENTS

IT IS FURTHER ORDERED that Defendants obtain acknowledgments of receipt of this

Order:

A. Each Defendant, within 7 days of entry of this Order, must submit to the

Commission and the State an acknowledgment of receipt of this Order sworn

under penalty of perjury.

B. For 3 years after entry of this Order, Defendants must deliver a copy of this Order l to: (I) all of their principals, officers, directors, and LLC managers and members; t I (2) all of their personnel involved in the advertising, marketing, or promotion of Page 11 of 18 J 0 (, 001179

Case 3:14-cv-01046 Document 3 Filed 07/24/14 Page 12 of 18

Defendants' Resale Ticket Sites or any Partner Operator's Resale Ticket Sites;

and (3) any business entity resulting from any change in structure as set forth in

the Section titled Compliance Reporting. Delivery must occur within 7 days of

entry of this Order for current personnel. For all others, delivery must occur

before they assume their responsibilities.

C. From each individual or entity to which a Defendant delivered a copy of this

Order, that Defendant must obtain, within 30 days, asigned and dated

acknowledgment of receipt of this Order.

VIL

COMPLIANCE REPORTING

IT IS FURTHER ORDERED that Defendants make timely submissions to the

Commission and the State as follows:

A. Within thirteen months after entry of this Order, each Defendant must submit a

compliance report, sworn under penalty of perjury, in which it must: (a) identify

the primary physical, postal, and email address and telephone number, as

designated points of contact, which representatives of the Commission and the

State may use to communicate with Defendant; (b) identify all of that Defendant's

businesses by all of their names, telephone numbers, and physical, postal, email,

and Internet addresses; (c) describe the activities of each business, including the

goods and services offered, the means of advertising, marketing, and sales, and

the involvement of the other Defendant (if applicable); (d) describe in detail

whether and how that Defendant is in compliance with each Section of this Order; 0 Page 12 of 18

------·------·------·----- 001180

c Case 3:14-cv-01046 Document 3 Filed 07/24/14 Page 13 of 18

and (e) provide a copy of each Order Acknowledgment obtained pursuant to this

Order, unless previously submitted to the Commission and the State.

B. For I 0 years after entry of this Order, each Defendant must submit a compliance

notice, sworn under penalty of perjury, to the Commission and the State within 14

days of any change in the following: (a) any designated point of contact; or (b)

the structure of any Defendant or any entity that Defendant has any ownership

interest in or controls directly or indirectly that may affect compliance obligations

arising under this Order, including: creation, merger, sale, or dissolution of the

entity or any subsidiary, parent, or affiliate that engages in any acts or practices

subject to this Order.

c. Each Defendant must submit to the Commission and the State notice of the filing

of any bankruptcy petition, insolvency proceeding, or similar proceeding by or

a.gain~ such Defenrl11nt within 14 d~tys of it~ filing.

D. Any submission to the Commission or the State required by this Order to be

sworn under penalty of perjury must be true and accurate and comply with 28

U.S.C. § 1746, such as by concluding: "I declare under penalty of perjury under

the Jaws of the United States of America that the foregoing is true and correct.

Executed on: __"and supplying the date, signatory's full name, title (if I applicable), and signature. I E. Unless otherwise directed by a Commission representative in writing, all

submissions to the Commission pursuant to this Order must be emailed to

[email protected] or sent by overnight courier (not the U.S. Postal Service) to: I Associate Director for Enforcement, Bureau of Consumer Protection, Federal I1 Page 13 of 18 c 001181

Case 3:14-cv-01046 Document 3 Filed 07/24/14 Page 14 of 18

Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580.

The subject line must begin: TicketNetwork, Inc., et a1 Consent Order.

F. Unless otherwise directed by a State representative in writing, all submissions to

the State pursuant to this Order must be emailed to [email protected]

and to [email protected], or sent by overnight courier (not the U.S. Postal

Service) to: Commissioner of Consumer Protection, 165 Capitol Avenue,

Hartford, CT 06106 with a copy to the Attorney General, 55 Elm Street, Hartford,

CT, 06106, sent by the same manner. The subject line must begin:

TicketNetwork, Inc., et al. Consent Order.

VIII.

RECORD KEEPING

IT IS FURTHER ORDEREDthat Defendants must create the following records for 10

years after entry of the Order, and retain each such record for 5 years:

A. Accounting records showing the revenues from all goods or services sold;

B. Personnel records for each person covered by Part VJ.B (1) and (2) of this Order

showing that person's: name; addresses; telephone numbers; job title or position;

and dates of service (including, if applicable, the date of termination);

C. Records of all written or electronic complaints covered by Part IV.B above and

refund requests received by Defendants concerning acts or practices subject to

this Order, and any response; c Page 14 of 18 001182

0 Case 3:14-cv-01046 Document 3 Filed 07/24/14 Page 15 of 18

D. Records demonstrating full compliance with each provision of this Order,

including all submissions to the Commission and the State; and

E. Documents reflecting each materially different search engine advertisement,

website, or other form of advertising that (1) contains representations covered by

this order and (2) that also contains, or links the consumer to an advertisement

that contains, an actual offer of Resale Tickets. Where the only material

difference among such advertisements is the specific venue, sports team, or

performer event being referenced, it will be sufficient to retain documents

reflecting a representative set of advertisements, plus information sufficient to

identify all the other events referenced in similar advertisements. ;;,..., u IX. COMPLIANCE MONITORING

IT IS FURTHER ORDERED that, solely for the purpose of monitoring Oefendants'

compliance with this Order:

A. Within 14 days of receipt of a written request from a representative of the

Commission or the State, each Defendant must: submit additional compliance

reports as set forth in Part VILA, which must be sworn under penalty of perjury;

appear for depositions; and produce documents pertaining to compliance with

Parts I-IV of this Order for inspection and copying. The Commission or the State

are also authorized to obtain discovery, without further leave of court, using any

of the procedures prescribed by Federal Rules of Civil Procedure 29, 30

(including telephonic depositions), 31, 33, 34, 36, 45, and 69. Provided that, with c Page IS of18 001183

Case 3:14-cv-01046 Document 3 Filed 07/24/14 Page 16 of 18

respect to all requests made pursuant to Part IX.A, Defendants, after attempting to

resolve a dispute without court action and for good cause shown, may file a

motion with this Court seeking an order for one or more of the protections set

forth in Rule 26(c).

B. For matters concerning this Order, the Commission or the State are authorized to

communicate directly with each Defendant. Defendant must permit

representatives of the Commission and the State to interview any employee or

other person affiliated with any Defendant who has agreed to such an interview

on any matters regarding any conduct subject to this Order. The person

interviewed may have counsel present, including counsel for the Defendants.

C. The Commission and the State may use all other lawful means to monitor

Defendants' compliance with this Order, including posing through its

representatives as consumers, suppliers, or other individuals or entities, to

Defendants or any individual or entity affiliated with Defendants, without the

necessity of identification or prior notice. Nothing in this Order limits the

Commission's lawful use of compulsory process, pursuant to Sections 9 and 20 of

the FTC Act, 15 U.S.C. §§ 49, 57b-1 or the State's lawful use of compulsory

process, pursuant to any statute or regulation permitting the use of compulsory

process, including section 42-11 Od of the Connecticut General Statutes.

Page 16 of 18 G 001184

0 Case 3:14-cv-01046 Document 3 Filed 07/24/14 Page 17 of 18

X.

RETENTION OF JuRISDICTION

IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for purposes of

construction, modification, and enforcement of this Order.

SO ORDERED this_ day of ______, 2014.

UNITED STATES DISTRICT JUDGE c

I l l I l •l I I 1 I

Il 1 i Page 17 of 18 0 !J

I 1 001185

0 Case 3:14-cv-01046 Document 3 Filed 07/24/14 Page 18 of 18

SO STIPULATED AND AGREED:

FOR THE FEDERAL TRADE FOR THE DEFENDANTS: COMMISSION:

TICKETNETWORK, INC.

Jle,. t1 Jt yW{ DEAN C. GRAYBILL By'li~Wt- Attorneys Counsel and Corporate Secretary Federal Trade Commission 600 Pennsylvania Avenue Room NJ-3212 TICKET SOFTWARE, LLC Washington, DC 20580 I, Tel: (202) 326-3082 (Graybill) (202) 326-2070 (Kresses) ! Fax: (202) 326-3259 By:J1 ~= i [email protected]; [email protected] ANDRA " c Counsel and Corporate Secretary of TicketNetwork, Inc., 1 FORTH~ -~TATE P~NNECTICUT: the sole member of Ticket Software, LLC

Ii ~ ~~. ~\TJ).\~0(7£

I J