Georgetown Law
Technology Review

From Swifties to fans of The Cure, concertgoers have recently bemoaned the exorbitantly high fees associated with already expensive tickets. Although Ticketmaster and similar sites had agreed to provide up-front, all-in pricing in a prior meeting with White House officials, legislators have called out ticketing sites for not abiding by this promise. As a result, President Joe Biden and the Federal Trade Commission (FTC) have proposed a rule banning hidden and misleading fees. This rule would not just affect ticketing sites but also would apply to any hidden fee, such as ATM fees and surprise hospital bills. The distinction between this rule and the previous promise is that the new proposed rule aims to introduce new enforcement mechanisms that induce the ticketing companies to fulfill their prior commitment.

Given that Live Nation and its subsidiary Ticketmaster maintain a near monopoly on the ticket market, the proposed FTC rule that leverages the enforcement capacities of other executive agencies should be implemented to check back against deceptive behaviors.

Addressing the Unfair Ticketing Marketplace

The ticket marketplace contains unique dynamics because of the finite ticket sellers, the limited number of live sporting and concert events, and the presence of bots that quickly buy tickets and resell them for exorbitant amounts. This marketplace is defined by its largest enterprise (Live Nation and its subsidiary Ticketmaster), which is responsible for approximately 70% of all concert ticket sales in the US. As such, the entities selling tickets maintain a disproportionate advantage in the marketplace when compared to buyers. It is this outsized influence that allows ticketing companies to charge hidden fees that can cost up to 50% of the original ticket price. These factors necessitate the government’s ability to step in and swing the balance of power back in favor of ticket buyers.

The proposed FTC rule would be a beneficial way to ensure that customers understand how much they pay for goods. One key factor affecting the unfair ticket marketplace is the lack of enforcement surrounding existing guidelines. Live Nation and Ticketmaster’s lack of willingness to implement certain rules has led key lawmakers to threaten to use antitrust regulation to break apart the largest ticket-selling enterprise. As such, the proposed FTC rule would create a more effective middle ground by protecting consumers while also not relying on the much more drastic action of breaking up Live Nation and Ticketmaster. By leveraging other federal agencies, such as the Consumer Financial Protection Bureau (CFPB) and the Federal Communications Commission (FCC), the rule creates a clear mechanism that can better utilize executive powers to protect the best interests of consumers, thus creating more stringent enforcement. Under Section 18 of the FTC Act, the FTC has the jurisdiction to address “deceptive or unfair acts or practices,” which means that they have the authority to enforce action against companies that deploy unfair junk fees. Absent the utilization of other agencies, the status quo problem remains, and ticket-selling companies can continue to circumvent regulatory guidelines. 

Responding to criticism of the FTC Rule

Live Nation and Ticketmaster have pushed back against such legislation by arguing that they cannot abide by such rules because they do not have control over the pricing visibility of certain events to the extent that the White House requested, but this line of reasoning is specious. In 2022, the White House clearly defined junk fees and hidden fees in response to Live Nation and Ticketmaster feigning ignorance over their behavior. Specifically, this definition delineates junk fees into four categories: hidden fees, surprise fees, exploitative or predatory fees, and fraudulent fees. Despite the pledge that ticket companies took back in June 2023 to display all-in ticket prices without hidden fees, Senator Amy Klobuchar (D – MN) has alleged that this promise has not been fulfilled. With a clear definition of these malevolent practices in place, there is no reason why Live Nation and Ticketmaster can’t provide an all-in pricing option that eliminates these hidden fees. The argument from Live Nation and Ticketmaster would be more persuasive if they were able to point out how their technological capabilities were insufficient to implement such changes or how the White House’s public statements further obfuscate the definitions of different fees. Yet, their arguments about a lack of pricing control do not attack the proposed rule on these merits. Consequently, the clear guidance from the White House addresses any criticism levied by Live Nation and Ticketmaster.

Critics of junk fee regulations argue that the scope of industries they affect is too broad, and thus, they might hurt businesses by not allowing customers to cover fees that are necessary to pay for legitimate business expenses. While this view might make sense in the abstract, in practice, these fees are oftentimes used in illegitimate and predatory ways. In fact, Americans are spending almost $65 billion per year on junk fees. Beyond the ticket industry, it is difficult to contend that airline fees and hotel fees are actually spent on purposes related to maintenance and upkeep because the price of hidden fees appears to commonly exceed the expected cost of maintenance and upkeep. As such, price transparency can result in lowered prices by allowing customers to reexamine whether they truly want to purchase a good in the first place. Because hidden junk fees are such a pervasive issue, the White House’s clear stance on both defining junk fees as well as implementing concrete enforcement mechanisms will help consumers by preventing them from spending astronomical amounts of money on goods that should otherwise not be as expensive. 

Conclusion

The unique dynamics of the ticket marketplace as well as the scope of junk fees in other domains clearly justify the enforcement of legislation that would protect consumers. Particularly, in an industry such as the ticketing marketplace, in which one corporate entity controls almost 70% of sales, the government needs to rein in the excessive amount of power afforded to these companies by the marketplace. By implementing the FTC rule that curtails the exploitative practices of dominant corporations, lawmakers can ensure that consumers are not subjected to arbitrary and hidden charges. A prohibition on junk fees is not only a measure to protect individual buyers but also a broader initiative to promote competition, accountability, and integrity within various industries. Policymakers must recognize the far-reaching implications of unchecked junk fees and take decisive action to create an environment where consumers can make informed choices without falling victim to predatory practices.