StubHub

January 26th, 2018

The National Advertising Division (or NAD as its friends like to call it) has a problem with the way online ticket reseller StubHub shows consumers a price for tickets and then tacks on service fees — at times adding up to more than 25 percent of the ticket price — later on in the checkout process.

In fact, NAD views this as a form of deceptive advertising, and has recommended that StubHub cease the practice and clearly and conspicuously disclose service fees alongside initial ticket prices. As NAD put it in a recent decision:

[T]he initial advertising interaction between a consumer and an advertiser should be truthful as this initial contact affects consumer behavior and determines whether the consumer will choose to learn more about the product and ultimately make a purchase.

Along the same vein, it also determines whether a consumer will look elsewhere for tickets which, StubHub countered, was what happened when it previously included service fees in its initial advertised ticket prices, leading to a tragic loss of market share. StubHub argued that consumers expect to encounter fees down the road because that’s how all major online ticket vendors and  resellers disclose fees (more on this to come).

But NAD didn’t buy StubHub’s “everybody’s doing it” excuse, noting that:

[I]ndustry-wide practice alone will not satisfy the requirement for reliable consumer perception evidence as to what a reasonable consumer understands.

After StubHub declined to comply with the recommended changes, NAD referred the matter to the FTC.

To the extent that StubHub is not the only second-hand ticket site to disclose fees this way, we at TINA.org thought it might be fun to run a little experiment comparing the initial advertised prices and the additional fees one encounters during the checkout process for a single event across a few ticket resellers. Try and follow along.

Let’s pretend you and someone important to you, perhaps your significant other or if you don’t have one of those, your cat, are interested in seeing Billy Joel live in concert at Madison Square Garden. Classic.

A Google search will yield lots of options but for this example, four ticket resellers that have taken out Google ads were considered: Vivid Seats, SeatGeek, TicketCity, and of course, StubHub. Generally speaking, initial prices for seats in the same section on the same date are comparable on each site. The same cannot be said for the total cost, as the increase incurred by additional fees ranged from 20 percent (SeatGeek) to 27 percent (TicketCity).

Vendor Initial Advertised Ticket Price (for two) Additional Fees Total Cost
StubHub $444 $112.20 $596.20*
Vivid Seats $458 $121.12 $579.12
SeatGeek $444 $91 $535
TicketCity $442 $122.54 $584.54*

*Includes a $20 increase per ticket on StubHub and a $10 increase per ticket on TicketCity, both of which occurred after clicking on the initial advertised ticket price. Note: Some screenshots were altered to include company logos.

However you look at it, the first price you see won’t be the last.

To read more about pricing, click here.

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The National Advertising Division, or NAD, is an investigative unit of the advertising industry’s system of self-regulation. It is administered by the Council of Better Business Bureaus. NAD asks advertisers to substantiate or change their claims in advertisements. As part of a voluntary system of self-regulation, however, its recommendations can be ignored by the offending advertisers. In those instances, NAD refers the offender to federal consumer protection agencies.

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