StubHub tricked consumers into overpaying for tickets, prosecutors say

Online event platform StubHub used predatory sales tactics to illegally mislead consumers into getting more tickets, prosecutors allege in a new lawsuit.

Washington, DC, Attorney General Brian L. Schwalb claims in the complaint that StubHub is tricking consumers by hiding mandatory fees until before the buyer makes a purchase. These charges can add up to 40% to the total cost of the ticket, according to the lawsuit.

The use of StubHub is called drip price – or when the company dangles the initial low price but later tacks on fees – can deceive consumers to pay more than they expected, according to the. The strategy violates the District of Columbia’s Consumer Protection Procedures Act, a law that requires merchants to provide accurate information about consumer goods sold in the city, according to the suit.

The complaint, filed Tuesday, also alleges StubHub failed to provide consumers with clear and accurate information about the purpose of ticket fees or how the company calculated those fees. It also said that StubHub’s use of transaction countdown clocks created a false sense of urgency to compel shoppers to make purchases.

A spokesperson for StubHub did not immediately respond to a request for comment.

Navigate “dozen screens”

The allegations come amid increased scrutiny by lawmakers and consumer advocates about the negative impact of trickle pricing, a retail tactic that typically involves paying a fee for a purchase that isn’t clearly disclosed, increasing the price of a product or service.

“Drip pricing is a phenomenon where companies try to sell goods or services to consumers and slowly, over time, change the terms of the transaction so that (at) the end of the transaction, it looks very different to the consumer. Schwalb told CBS News.

“StubHub intentionally misleads consumers by deceptively offering low prices up front, luring consumers into a long and drawn-out purchase process, often making consumers go through multiple screens before finally being presented with a final price,” he said.

The tactic is intended to prevent consumers from abandoning purchases, Schwalb said. For example, the StubHub site displayed a countdown clock that made consumers think the tickets they purchased might be gone, and also required people to click through multiple screens to get to the purchase page, according to the suit.

As a result, consumers often buy tickets that include fees that add 40% to the final price, the lawsuit claims. The attorney general’s office estimates that consumers in Washington, DC, have paid a total of $118 million in hidden fees to StubHub.

Schwalb’s office wants to stop StubHub from using that tactic, as well as to recover $118 million in fees that people have paid the company to buy tickets to the DC event.

The Biden administration is sworn in the cost of warthat costs shoppers $29 billion a year in excessive fees, according to the Federal Consumer Financial Protection Bureau.

How consumers are manipulated

Price drops can lock consumers into paying more than they had planned in part because shoppers estimate the time it will take to start a new search for a cheaper option, Vicki Morwitz, a marketing professor at Columbia University’s Graduate School of Business, told CBS News.

“They have to decide, ‘Is it worth it to start over?'” Morwitz told CBS News.

When costs drop, consumers are more likely to buy — but they also tend to buy products that seem cheaper at first but end up being more expensive, he said.

“It’s a problem because consumers end up buying something they don’t want, or it’s more expensive than they want,” Morwitz added. “And it’s not just bad for consumers — it can be dangerous for honest competitors.”

vague fee

Prior to the purchase, StubHub imposed “fulfillment and service fees” that the lawsuit alleges were unrelated to “fulfillment” or “service.” The fees can vary in price, and StubHub does not tell consumers how the fees are calculated or what is covered, according to the suit.

For example, the lawsuit includes examples of tickets to see an Usher concert, with each ticket initially advertised at $178 each. But at the end of the purchase, StubHub added a $70 fulfillment and service fee per ticket, increasing the final price by about 40%, prosecutors said.

When CBS MoneyWatch searched for tickets on StubHub for the show starring “Crazy Ex-Girlfriend” star Rachel Bloom, the show was advertised for $92 per ticket. But at checkout, $38 per ticket fulfillment and service fee is added, increasing the cost to 41%. The ticketing service does not specifically mention the fees to be paid.

StubHub has faced lawsuits before over pricing, including a January class action suit that alleged the platform hid final ticket costs from customers. And of course, StubHub doesn’t just rely on trickle down prices, with hotel chains such as Marriott settle the same lawsuit.

“In the end, consumers pay more than they think they will and don’t have the opportunity to comparison shop down the street,” Schwalb said.