As most fans of live entertainment know, the upfront price of tickets to live theater productions, sporting events or concerts can often look quite appealing, even reasonable. However, after the buyer selects their tickets and seats and enters their credit card information, they are hit with surprising fees that can increase the total price by as much as 30% to 40%.

To combat this, New York Gov. Kathy Hochul recently signed legislation, S.B. 9461, that will demand greater transparency from ticket sellers. Set to take effect on Aug. 29, the new law will ban hidden fees and prohibit delivery charges on tickets that are sent electronically or printed at home.

The Secondary Ticket Market

New York's new ticketing law will prohibit large third-party ticket resellers such as Ticketmaster Entertainment Inc. and StubHub Inc. from using a tactic commonly known as drip pricing to attract consumers with a lower advertised price, only to tack on hidden fees at the last step of the checkout process that dramatically increase the total cost of the tickets.

Large-scale ticket reselling companies have long been under scrutiny for drip pricing. In 2018, a study conducted by the U.S. Government Accountability Office found that hidden ticket service fees could reach as high as 37% of the ticket's face value.

Ticketmaster told a congressional committee in 2020 that the company would be willing to move to a more transparent fee disclosure system, but only if the company and its competitors were required to do so by law.

Further, in a 2018 class action complaint filed in the Superior Court of the State of California, County of San Francisco, the plaintiff alleged in Susan Wang v. StubHub Inc. that StubHub's practice of showing its fees for the first time at the end of the purchase process violated certain sections of the California Business and Professions Code and the California Consumers Legal Remedies Act.

Earlier this month, the court approved the parties' proposed settlement, which will require StubHub to pay up to $20 million in credits and up to $2.5 million in cash payments to consumers.

With this background, New York becomes the first state to explicitly address deceptive and predatory practices in the secondary ticket market through legislation.

Starting Aug. 29, all ticket sellers must list the total cost of a ticket, inclusive of all mandatory fees, for a scheduled entertainment event before the consumer can select the tickets to be purchased, so that buyers can make a more informed decision.

The law defines entertainment as "all forms of entertainment including, but not limited to, theatrical or operatic performances, concerts, motion pictures, all forms of entertainment at fair grounds, amusement parks and all types of athletic competitions."

The law also requires sellers to explicitly detail what portion of the total cost is attributed to mandatory fees. In other words, prior to the ticket being selected for purchase, ticket sellers must disclose:

• The cost of the ticket itself;
• The cost of mandatory fees; and
• The total aggregate cost.

Such fee disclosures cannot be misleading or false, nor may they be presented more prominently or in a larger font than the all-in cost. Online resale marketplaces will also be required to disclose the established price charged by the operator of the place of entertainment that is printed or endorsed on the face of each ticket if the ticket's resale cost is higher than its face value.

In addition, this new law prohibits ticket sellers from charging any fee related to the delivery of tickets if such delivery is made electronically or when purchasers can print the purchased tickets at home.

The only exception is that ticket sellers are permitted to charge a "reasonable and actual cost" for the physical delivery of the tickets if the purchaser selects this method of delivery. The law does not define "reasonable and actual" cost, however.

Individual Places of Entertainment Are Also Covered Under the Ticketing Law

While the law is undoubtedly aimed at prohibiting deceptive practices by large third-party ticket resellers, the law also largely applies to individual places of entertainment such as nightlife establishments, clubs, cabarets and theaters that sell tickets directly to consumers for scheduled entertainment events.

Such establishments must ensure that they are advising the consumer of the total price, including an itemized list of all fees, at the outset of the transaction.

Takeaway

New York's ticketing law makes it the national leader in prohibiting deceptive drip pricing in both the primary and secondary ticket market. Violations can result in a fine of at least $250; however, when the violator is an establishment rather than an individual, the state has the discretion to increase this fine to up to $500, or three times the amount of the establishment's gain on the deceptive sale.

The law also allows an individual injured by a violation to bring a private action to enjoin the unlawful act and recover their actual damages, or $50, whichever is greater. The court may also award reasonable attorney fees to a successful plaintiff.

In sum, New Yorkers will soon enjoy a more transparent and consumer-friendly experience when they buy tickets to a live event.

However, while big companies such as StubHub and Ticketmaster are expected to change their platforms prior to the ticketing law's Aug. 29 effective date, individual places of entertainment that sell tickets directly to consumers are warned that they should begin working with their web developers to ensure that their platforms are transparent and compliant with this new law.

Specifically, individual establishments using ticketing systems that allow them to configure the consumer's booking process on their own websites should work with their web developers to ensure that consumers can clearly view the cost of the ticket itself, the cost of any fees and the aggregate price at every step of the ticket purchasing process, including price lists, seating plans, confirmation emails and wherever else pricing is discussed.

Individual establishments should consider various options to ensure that the aggregate price is displayed as clearly and consistently as possible.

If an individual establishment works with a ticketing system in which transactions are completed on a different web domain from the individual establishment's website, also known as a white-label site, it should verify what steps its provider is taking to comply with the ticketing law. Individual establishments are warned that failure to do so can result in liability for the establishment and not the third-party provider.

While entertainment establishments must take the time to ensure that their online platforms are in compliance with ticketing law, it is also a good opportunity to certify that their websites, mobile applications and reservation systems are accessible to people with disabilities and do not run afoul of the Americans With Disabilities Act, and state and local law.

Businesses should review the U.S. Department of Justice's March 18 guidance[1] and work with their web developers to ensure that their online platforms are easily accessible to people with disabilities and are in compliance with the law.