Brian Schwalb the Attorney General of Washington, D.C. has sued the online ticket exchange platform StubHub on Wednesday, alleging deceptive and unfair pricing.
The lawsuit claims StubHub uses deceptive advertising of low ticket prices to lure consumers who pay vastly more after an arduous checkout process.
“This is no accident StubHub intentionally hides the true price to boost profits at its customers’ expense,” Schwalb said in a statement.
The ticketing platform, valued at over $16 billion, had been eyeing a summer initial public offering (IPO). However, earlier this month, the company announced it would delay the IPO until after Labour Day, citing difficult market conditions.
The AG’s lawsuit said the ticketing platform uses a system called “drip pricing,” which employs a countdown clock to create a false sense of urgency. The complaint argued that StubHub tacks on substantially higher “fulfilment and services fees” without an adequate explanation.
The lawsuit comes as consumers and lawmakers alike criticize the hidden or “junk” fees charged by ticket sellers. Other businesses like airlines have also faced allegations of deceptive pricing.
In its lawsuit, the attorney general’s office said that from 2014 to 2015, StubHub used “all-in pricing,” in which the advertised price included mandatory fees. The complaint alleged that StubHub did a testing period where it randomly assigned consumers to one of the two models. The company found that if it hid fees until the end of the checkout, consumers were more likely to buy tickets and purchase them at the higher prices, the lawsuit said.
“The District of Columbia is particularly impacted by StubHub’s illegal conduct, as residents and visitors spend more per capita on live entertainment in Washington, D.C., than those in many other U.S. cities,” the AG’s office said.
In one example, the complaint shows a pair of tickets with an advertised price of $178 per ticket, or $356 for a pair. As the clock ticks down, the checkout page shows the total price about 40% higher, at $497 for the two tickets.
“StubHub never explains to consumers throughout the purchase process how the fees for a particular ticket purchase are calculated,” the complaint said.
Since 2015, StubHub has sold over 5.5 million tickets to consumers in the district, extracting an estimated $118 million in hidden fees, the AG’s office said.
The company also faced a federal class action lawsuit in January for allegations that it deliberately misled customers on ticket prices.
StubHub has been one of the top players in the ticketing industry since it launched in 2000.
Co-founder Eric Baker and his company Viagogo reacquired the ticket seller from eBay in 2020 in a $4 billion deal.
