Prosecutors claim that StubHub, a company that facilitates ticket exchange and resale in the United States, uses unfair and deceptive sales practices that mislead consumers.
Brian L. Schwalb, attorney general of Washington, D.C., filed a lawsuit against the online ticket company on Wednesday for hiding mandatory fees from consumers until just before they make their purchase. According to an example scenario in the complaint, these mandatory fees can raise the final price of consumers’ purchases by 40%.
The complaint further explains StubHub’s use of drip pricing, a “…practice of only advertising only part of a product’s price and then revealing other charges later as the consumer goes through the buying process.” Using this strategy, the company is violating the Consumer Protection Procedures Act for the District of Columbia, which provides consumers the right to “…truthful information at every step of the purchasing process,” per the complaint.
In addition to the claims surrounding StubHub’s use of drip pricing, the lawsuit alleges that the company fails to provide consumers with an explanation for how the additional fees are calculated.
The complaint shows an example of the purchasing process on the StubHub website.
Customers begin the process by selecting tickets they would like to purchase, priced deceptively low, without adding in the mandatory fees. Once their selection is made, the StubHub website begins a transaction countdown clock, making consumers feel pressured to rush into a purchase without having ample time to make an informed decision. After going through several pages confirming their purchase and entering their information, customers can finally see the actual price of their purchase.
The complaint example shows a customer wanting to purchase two tickets for an Usher concert. According to the initial page the customer visited, each ticket costs $178. Once the customer moves through the pages under the pressure of the countdown clock, they see the “fulfillment and service fee” of $70 per ticket, making the total cost $497, increasing the initial price by nearly 40%.
StubHub’s hidden “fulfillment and service fee” can vary in price, depending on the purchase, with no detailed explanation of how these fees are calculated, as stated in the complaint.
Following the complaint filed by Schwalb, StubHub released a statement reassuring consumers of their commitment to transparency.
“We are disappointed that the D.C. Attorney General is targeting StubHub when our user experience is consistent with the law, our competitors’ practices and the broader e-commerce sector,” StubHub stated, per CBS News Texas. “We strongly support federal and state solutions that enhance existing laws to empower consumers, such as requiring all-in pricing uniformly across platforms.”
Schwalb further explained why StubHub engages in these practices and why he is starting this legal battle.
“StubHub intentionally hides the true price to boost profits at its customers’ expense,” Schwalb stated. “The District is home to one of the nation’s largest and most vibrant live entertainment scenes, and StubHub’s predatory tactics disproportionately harm District residents. That is why today we’re suing to end StubHub’s exploitative pricing scheme.”
According to the complaint, the Attorney General’s office estimates that StubHub has reaped “…approximately $118 million in hidden fees…” just from consumers in Washington D.C. since September 2015. Schwalb aims to recoup the millions of dollars in hidden fees that D.C. consumers have been forced to pay StubHub and end their deceptive practices, per CBS News Texas.
Earlier this year, StubHub faced a similar class action lawsuit related to hiding final costs for tickets from its customers. The hotel giant Marriott also recently faced a similar lawsuit related to price dripping, as reported by CBS News Texas.
