Terms and conditions of sale
51. It is apparent that many of the measures likely
to be the most effective in preventing unauthorised secondary
sales build upon terms and conditions restricting the transferability
of tickets, so that much of the promoters' strategy hinges on
the enforceability of those restrictions. This raises two important
issues, firstly whether those terms and conditions are enforceable
as a matter of law, and secondly the extent to which they are
enforceable in practice, given the changed face of the secondary
market, with many consumers selling tickets to each other via
the Internet.
The legal position
52. For the purposes of the Unfair Terms in Consumer
Contracts Regulations 1999 (UTCCRs), a contractual term is unfair
(and unenforceable) if "contrary to the requirement of good
faith it causes a significant imbalance in the parties' rights
and obligations under the contract, to the detriment of consumers."
The OFT has said that it is possible to argue under the UTTCRs
that it is unfair to restrict consumers from reselling tickets
for profit unless fair mechanisms are provided where consumers
can dispose of a ticket they can no longer use, although it is
for a court to decide and ultimately determine what terms and
conditions are fair or unfair.[171]
53. The Society of Ticket Agents and Retailers (STAR)
told us that in January 2005 the OFT had invited STAR to draw
up model terms and conditions for use by its members, and that
work with interested bodies has been proceeding with a view to
seeking approval under the OFT's Consumer Code Approval Scheme,
but that one outstanding issue concerned the draft condition precluding
ticket holders from reselling tickets without the authority of
the event organiser. Mr John Fingleton, Chief Executive of the
OFT, told us that agreement with STAR was expected soon, and that
although he could not give advance details of the agreement, the
primary focus would be around what restrictions could be put on
the resale by consumers of tickets and linking that to whether
refunds were available.[172]
He said that venues such as the Barbican offered vouchers to customers
who handed back tickets up to three days before an event, but
that the courts had never pronounced on whether that would be
regarded as equivalent to allowing resale. He also indicated that
individuals who bought tickets with the intention of profiting
by resale might not qualify for consumer protection, and that
drawing the fine line between "consumers acting as consumers"
and "consumers becoming secondary agents" would be a
challenge if the cases ever got to court.[173]
54. The Government told us that "some agents
do not provide refunds once the ticket is sold in the same way
as goods can be returned to a shop".[174]Although
witnesses from the entertainment sector told us that they were
generally happy for people who could not attend events to sell
on their tickets at face value, and that they were endeavouring
to provide improved resale and exchange facilities for those consumers,
they were adamant that they could not offer a blanket refund policy
at present.[175] In
this context it is necessary to distinguish between the different
kinds of services offered for customers' returns. The Wimbledon
Championships (for which demand far exceeds supply) are a rare
example of the organisers guaranteeing a full refund, up to the
eve of the day to which the ticket applies,[176]
but more commonly organisers will refund the price paid only after
they have resold a returned ticket. The Society of Ticket Agents
and Retailers told us that many venues and event organisers claimed
that they already offered to help customers who found themselves
in a real predicament but that they were concerned about publicising
the service.[177] Mr
Rob Ballantine of the Concert Promoters Association said that,
although it was not openly said, traditionally refunds had been
given to fans who returned their tickets "for genuine reasons",
especially if the event was a sell out so that the tickets could
be resold straight away.[178]
55. The Association and the Society of Ticket Agents
and Retailers, among others, gave reasons why blanket refund policies
would not be possible. One was that such a policy would underwrite
the secondary market, resulting in touts purchasing as many tickets
as they could, knowing that any they could not sell could be returned
to the promoter for a refund.[179]
Another was that events were built on ticket sales, with unacceptable
risks of financial collapse in the event of tickets flooding back
at the last minute from consumers who had changed their minds
after seeing bad reviews or discouraging weather forecasts.[180]
They said that they were, however, committed to the further introduction
of ticket resale mechanisms where fans could sell tickets
at the price they originally paid, but that the service could
only be extended once legislation was introduced to ensure that
it was not abused by touts.
56. The ticket resale mechanisms which were described
to us allowed resale at face value,[181]
and appeared to be available only once all tickets for an event
have been sold.[182]
WeGotTickets told us that no organiser was going to be happy for
customers to return unwanted tickets for events which were still
on sale.[183] eBay
commented that such a service was a long way short of a guaranteed
refund and that, even if the ticket was sold, the consumer would
not recover the full outlay as there would be a 10% charge for
the service.[184]
57. Unsurprisingly, witnesses involved in the secondary
market took the view that terms and conditions restricting resale
of tickets were indeed unfair to consumers and therefore unenforceable.[185]
The Government drew our attention to a recent test case instigated
by eBay under Australian legislation, where a condition on an
event ticket provided that, should it be re-sold for profit, it
would be cancelled and the holder would be refused entry. The
court held that the condition conveyed a message that the promoter
was legally entitled to and would detect and cancel any ticket
resold for profit, but as it was impossible for the promoter to
detect, cancel and refuse entry for every ticket resold for a
profit, this made the condition misleading.[186]
Mr Alasdair McGowan, Head of Public Affairs at eBay UK. told us
that, in that instance, eBay had wanted to "stand up for
the consumer", and "vigorously defended the rights of
people to resell their tickets" because it believed in the
secondary market.[187]
58. We
accept that a blanket refund policy may not be a realistic option
for organisers. Apart from the likelihood that it would encourage
touts to buy up swathes of tickets safe in the knowledge that
they could get their money back on any not sold for profit, it
would carry an unacceptable commercial risk: in this context,
tickets are not like durable goods which can be returned unused
to a shop for resale, not least because they become valueless
once the event has taken place.
59. Quite
apart from any question of whether promoters' returns mechanisms
are adequate to balance and make conditions restricting resale
fair and enforceable, it seems to us highly improbable that consumers
who are simply seeking to avoid making a loss on tickets which
they are unable to use would find the returns services on offer
from the primary market to be a satisfactory alternative to what
the secondary market offers. Services offering less than full
reimbursement and then, only for sold out eventsso that
the primary market can only profit and never lose by providing
the servicewould be less attractive, and of little real
benefit to those consumers. The primary market must do more to
help the "genuine" supporters who cannot attend for
"genuine reasons" to mitigate their losses. As well
as providing more authorised resale mechanisms, refunds should
be more openly available to those supporters, who should not be
penalised by a blanket refusal to give refunds put in place to
protect the market for touting. More widespread use of schemes
offering vouchers could offer a constructive way forward, with
the potential to give full satisfaction to the consumer with less
encouragement for tout abuse than cash refunds.
60. We
look forward to learning the outcome of the negotiations between
the Office of Fair Trading and the Society of Ticket Agents and
Retailers (STAR) on model terms and conditions for use by STAR
members. We are disappointed that they have still not been announced
and we urge the OFT to explain the reasons for the delay. However,
it seems to us wholly unsatisfactory that there should continue
to be uncertainty as to whether standard terms and conditions
restricting resale, which underpin organisers' strategies against
touting, would be enforceable against consumers who sell in breach
of them. We observe that eBay, which says that it should not be
asked to take sides in contractual disputes about terms and conditions
between organisers and consumers, nevertheless saw fit to launch
a test case to "stand up for the consumer" in Australia.
We find it surprising that none of the stakeholders has apparently
been motivated to test standard terms and conditions in this country
and we recommend that they should consider the option of litigating
so that the uncertainty may be resolved. We note in this respect
that, shortly after giving evidence to the Committee, the Office
of Fair Trading launched a court case to test the legality of
bank overdraft charges. We would encourage it to make it clear
that, failing voluntary agreement within the industry, it is prepared
to do so over terms and conditions of secondary ticket sales and
to set a clear deadline in public by which it is prepared to do
so.
Enforceability of terms and conditions in practice
61. Whether or not such conditions are legally enforceable,
the evidence indicated that sales were booming on the secondary
market often on the assumption that they are not enforceable,
not justifiable, and are even irrelevant. VisitBritain said that
where resale or transference was explicitly prohibited, "consumers
should respect that",[188]
but it is patent that they do not. Providers of on-line market-places
took the view that the terms were unenforceable because they were
unfair but that, in any event, resolution of disputes relating
to contractual terms was not their responsibility, although eBay
told us that it did draw its users' attention to the fact that
terms and conditions are often applied to event tickets.[189]
62. Promoters told us that practical difficulties
in the way of enforcement included that auction sites and ticketing
shops allowed people to "hide the ticket details", and
"turn a blind eye to sales being in contravention of tickets'
terms and conditions".[190]
This was a fundamental issue dividing the stakeholders. If the
ticket details are disclosed, then the issuer can enforce the
condition prohibiting unauthorised resale simply by cancelling
the ticket without giving a refund, and can sell again to another
consumer.[191] While
traders are statutorily obliged to inform buyers of the location
of the seat, consumers selling tickets on are not.[192]
The Concert Promoters Association told us that eBay had declined
its request to provide, on their site listings, all ticketing
details including block, row and seat number and the terms and
conditions that "make it an offence for the ticket to be
transferred", which demonstrated that eBay was "deliberately
and knowingly in alliance with the touts".[193]
Mr McGowan, Head of Public Affairs at eBay, said that cancelling
tickets in this way would undermine the whole notion of the secondary
market.[194]
63. We have made recommendations about possible litigation
above. We accept that, in the absence of refunds or authorised
resale mechanisms, secondary sellers may providefor better,
or worsethe only avenue by which people may sell unwanted
tickets, for whatever reason. During the course of our inquiry,
however, we have found evidence of distasteful practice by secondary
sellers, some of which runs counter to the evidence which they
have given. Among the examples are the initial refusal by eBay
to remove from sale tickets from the recent Concert for Diana,
for which tickets were allocated free of charge and for charitable
purposes.[195] Subsequent
to our evidence session, music promoter Harvey Goldsmith also
provided evidence that eBay had also refused to remove offers
of tickets for a charitable concert featuring Led Zeppelin, which
he alleged were "false and misleading".[196]
This hardly suggests that eBay is just "standing up"
for the consumer; an alternative interpretation is that eBay is
not just a "market place" but a frontline player concerned,
for example with the litigation in Australia, with protecting
its commercial interests.
64. In the sporting arena, we have also seen evidence
that secondary agents such as Seatwave and viagogo have advertised
tickets that were not yet on saleso-called "futures
tickets". In June this year, for instance, Seatwave and viagogo
advertised tickets for the Rugby Union 2008 Six Nations Championship
which had not yet been designed or printed, let alone released
for sale, according to internet "screen grabs" shown
to us by Ticketmaster.[197]
This advertising of so-called "futures tickets" was
contrary to the evidence Mr Cohen, certainly, of Seatwave, gave
to the Committee, that they were not selling "futures tickets"
which had not yet gone on sale.[198]
In oral evidence, Mr Burns, the chairman of ASTA, referred to
another secondary internet ticket agent, Get Me In, its listing
of tickets for the Concert for Diana and its commitment to donate
all proceeds from those ticket sales to charity.[199]
In June 2007, however, just as tickets were advertised for sale
officially for the Rugby Union Heineken Cup Final in May 2008,
Get Me In was showing these tickets for sale on the wrong day
and at the wrong stadium (Saturday 24th May at Twickenham)and
for the right day at the wrong stadium (Sunday 25th May at Twickenham
again, rather than correctly at the Millennium Stadium in Cardiff).
65. One of the issues with which the Committee was
concerned in conducting this inquiry now was the extent to which
the expansion of internet use enabled sophisticated applicants
to gather ticketsand the offer them for resale at much
higher prices immediatelyon a greater, more systematic
scale than the traditional activities of touts outside stadiums.
In the evidence we have seen, there is clearly no reliable publicly
available data on this. Mr Nick Blackburn, Managing Director of
Seetickets, believed that 30-35% of tickets are snapped up by
people who simply want to re-sell them and the rise of the internet
has spurred on what are "clearly colloquially known as bedroom
touts".[200] Mr
Paul Vaughan, Operations Director at the Rugby Football Union,
estimated that "about 60%-odd" of resellers offered
only one or two tickets and "30-40%" offered "multiple
tickets".[201]
66. Clearly, in an unregulated free market, we appreciate
the difficulty of gaining reliable statistics. When asked by the
Concert Promoters Association to open its books, for instance,
to show whether it was collaborating with known ticket touts,
we were told that eBay had refused, citing data protection legislation
and its own privacy policy and privacy agreements with users.[202]
In oral evidence, when pressed, both Seatwave and viagogo denied
"collaborating" with organised touts or re-sellers,
stating thatlike eBaythey were marketplaces only.[203]
We heard, however, that a feature of the industry was so-called
"limited user agreements", by which everyone who sells
via the sites had to provide them with a guarantee that they will
deliver.[204] It is
through this mechanism, clearly, that they are then able to offer
buyers using their own guarantees in respect of refunds.
67. In the absence of clarity
over the legality of restrictive terms and conditions of re-sale,
and widespread availability of guaranteed refunds or official
exchange mechanisms by promoters and primary sellers, we commend
sites such as Seatwave and viagogo on their development of mechanisms
to protect purchasers using their own sites. We believe clearly,
however, that it is in their own commercial interests to do so.
From the evidence we have seen, including the availability of
"futures tickets" (advertising their own ability to
lay hands on tickets), we can only conclude that such sites do
collaborate with sophisticated buying operations. Despite subsequent
denials, indeed, when pressed on this issue Mr Cohen of Seatwave
remarked: "I do not know how you would describe 'collaborating'.
If the marketplace works well and people want to sell tickets,
I guess you could accuse us of that".[205]
As
long as secondary sellers continue to indulge in dubious or suspect
practices, there will inevitably be calls for legislation and
we would encourage them to clean up their act by, at the very
least, not advertising tickets which cannot possibly be in their
or their customers' possession at the time.
68. We
would also welcome an across the board commitment not to list
tickets distributed free of charge, for example for charity events,
to particular attendees, such as children or the disabled. In
the interests of consumer confidence and safety, too, we would
like to see secondary marketplaces require sellers to provide
more information about ticket details including, ideally, face
value, block, row and seat numbers. However, we recognise that
this is only practical if the event organisers
do not simply cancel all tickets advertised for sale in the secondary
market.
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