Trade Me: submission on ticket reselling in New Zealand

24 April 2019

Trade Me submission on MBIE discussion

document “Ticket reselling in New Zealand”

Trade Me appreciates this opportunity to comment on MBIE’s “Ticket Reselling in New

Zealand” discussion document.

Trade Me is New Zealand’s largest online auction and classified listing platform. We

facilitate millions of transactions each year, including some ticket reselling transactions. We

are not actively involved in either the primary ticket market or secondary ticket market, but

through our Marketplace we see some sales in the secondary ticket market.

We have previously provided information to MBIE to illustrate the ticket sales that occur on

Trade Me’s Marketplace. We hope our view as a company, which regularly interacts with

Kiwis engaging in the secondary ticket market, will assist the Ministry's policy development

process.

In our 20 years of operating online, we’ve found that laws work best when they are:

● straightforward and easy for consumers to understand and apply;

● practical for businesses and traders to operationalise and enforce with clear

definitions;

● implemented in a pragmatic way; and

● consistent online and offline.

We’ve considered these principles in making a submission on your discussion paper.

We’ve structured our submission to align with the questions in your discussion paper. Given

our limited operations, we have only commented on some of your questions.

Please let us know if there is additional information that Trade Me can provide to MBIE or

the Minister to assist with your policy process.

Yours sincerely

James Ryan

Policy and Compliance Manager

Trust and Safety | Trade Me

Question 4. Do you think ‘ticket onsellers’ should be treated

differently to ‘ticket scalpers’ in any options to address ticket

reselling practices?

Yes. It is common for New Zealand consumer protection laws to differentiate between “in

trade” sellers and casual sellers. For example, in other markets where goods are traded over

Trade Me there are additional obligations placed on professional sellers (such as registered

motor vehicle traders). Consistent with this, we think that there are sound policy reasons for

treating “in trade” sellers of tickets (including ticket scalpers) differently from casual ticket

onsellers.

Questions 5-7 re MBIE’s summary of the key issues and

objectives

Trade Me sees low levels of consumer detriment in respect of ticket reselling on our site. As

illustrated by data previously shared with MBIE, we do not see a high level of consumer

complaints or disputes in relation to ticket sales that occur on Trade Me. The discussion

paper suggests that consumers are being misled or deceived when purchasing resale

tickets. But, as described below, we do not think this is the case on Trade Me’s site. We

think that Trade Me is an ideal place to sell and buy tickets.

Trade Me’s online marketplace ensures that the sales between buyers and sellers are

traceable. Our listing policies and terms and conditions require listings to be clearly

described. We offer buyer protection where one of our payment options is used (see our

policy for more information -

https://help.trademe.co.nz/hc/en-us/sections/360001586872-Buyer-Protection). Our Fraud

Prevention team monitors the sale of tickets, particularly during popular events to ensure our

site rules about listing of tickets are maintained to protect our members and our business.

Most ticket sales on our site occur where the seller can no longer attend an event, and the

seller is just seeking to recover the purchase price. There’s usually a double motive -

avoiding an economic loss and ensuring that someone gets to enjoy the event. That said,

we do see some sellers making a profit from the sale of tickets to sold out events on the site.

But we also see very grateful purchasers who are happy to pay those inflated prices to

attend the event.

We think the consumer detriment from the secondary ticket market is over-stated in the

discussion paper. There may be a desire from participants in the primary market to see

more profits go to those that contribute to the production of the event, and a concern that

inflated prices in the secondary market don’t achieve this - but this isn’t a consumer welfare

concern.

We feel that the ticket reselling sites are often the scapegoat when tickets for high profile,

sold out events sell for inflated prices. The media tends to focus on sales on sites like Trade

Me as being where tickets are sold. Such media often does not focus on the purchaser who

was happy to secure a ticket, or on whether the primary ticket supplier was sensible in how

they managed the primary ticket sales to ensure fair access to tickets. For these events,

typically it’s well publicised that ticket resale prices are inflated and we do not believe the

purchasers of those inflated tickets are misled about the additional cost they have paid.

We also note that it's often opaque as to how many tickets are actually made available to the

public - particularly to events like the rugby where clubs and associated entities often get first

runs at tickets. This is a well intentioned practice however the wider public is not generally

aware of it so may not appreciate why there is limited general admission tickets available.



To the extent there is consumer detriment arising from ticket scalping, this primarily appears

to result from:

● overseas parties adopting inappropriate practices. The detriment arises largely where

the tickets are misdescribed or cannot be used to gain entry. Often there is fraud or

other misleading and deceptive practices. Consumers theoretically should have

some legal protection under the Consumer Guarantees Act, but there typically are

jurisdictional difficulties in enforcing these protections. The Commerce Commission’s

current proceedings against Viagogo are evidence of this.

● the use of ticket purchasing ‘bots’. The use of these bots (i.e. to purchase large

quantities of tickets when the tickets are first released for sale) limits the availability of

tickets for legitimate individual purchases, which leads to event fans needing to go to

secondary ticket markets (with potentially inflated prices) to gain access to tickets to

events.

● characteristics of the primary market that contribute to demand in the secondary

market e.g. a promoter wanting a “sell out” event and allowing bulk buys of tickets to

drive a fast sell out. Or the promoter staging the release of concert nights (e.g.

releasing a Thursday night first, and then a Saturday once the Thursday sells out and

only releasing the Friday if both the Thursday and Saturday sell out - which can result

in consumers purchasing tickets to two concerts and looking to sell one ticket in the

secondary market).

● related costs. Where a ticket is invalid, typically the purchaser has also incurred

other costs (such as travel and accommodation) and the disappointment in missing

out on the event.

MBIE is exploring whether greater competition in the primary ticket market would

reduce problems in the secondary ticket market.

Trade Me doesn’t have a firm view on this, but believes that additional obligations in

the primary market may help to resolve some of the issues (e.g. perhaps an

obligation on the primary ticket seller to offer a refund in particular scenarios, or to

subsequent transfer occurs or some other form of a ticket validation service).

A validation service would be helpful, as currently the primary ticket seller often

includes a contractual term that restricts resale, which means that purchasers of

tickets in the secondary market are reluctant to contact the primary ticket seller to

confirm if a ticket is valid out of fear the ticket may be voided.

We consider that even if there were a more competitive primary market, most events

would only be sold through a single primary supplier.

Questions 8 and 9 re effectiveness of the status quo

Trade Me believes that existing consumer protection laws do offer some protection

where they apply (e.g. where tickets are sold in trade). In particular, we consider

that existing consumer protection laws are adequate in respect of secondary ticket

sales on our platform.

Given the issues that have occurred (e.g. in respect of Viagogo) we consider there

will be growing consumer awareness of potentially “dodgy” ticket sites, such as

Viagogo. We think this will naturally lead to primary ticket sellers looking to improve

their purchasing processes. Trade Me supports industry led solutions for a more

optimum purchasing experience from the original ticket seller.

We also support greater enforcement for Fair Trading Act breaches by secondary

ticket suppliers.

We do not think there is a sufficient need for additional regulation at this time. For

example, under the current regime Trade Me operates our regime which allows:

● An effective channel for the resale of tickets. Ticket holders who cannot

attend the event are able (usually) to find a buyer through a safe and

transparent process on Trade Me's trusted and safe platform.

● Our fees are transparent and borne by the seller. The buyer pays only what

they bid or ‘buy now’ there are no hidden fees and no way for us to charge

them.

● Trade Me has a Trust and Safety team of just under 40 full time staff which

focuses on keeping our site safe. Part of this work involves administering our

Buyer Protection scheme which kicks in if a dispute with the trade is unable to

be resolved between the buyer and seller and of no fault of the buyer. In the

case of a ticket purchase, most buyers who used one of our payment tools

would be covered by the Buyer Protection scheme - but ‘we won't refund if

someone changes their mind.’ Although, this coverage extends only to the

tickets, not travel or accommodation costs.

● Trade Me does not permit ticket barcodes and seating numbers to be shown

on listings to prevent opportunist scammers using ticket information to

generate fake ticket listings on other sites.

● Trade Me requests ‘proof of goods’ where we have reason to believe a

member is not in possession of the tickets, and will remove listings if they are

not in possession. Where proof of the ticket’s existence has been requested,

the listing is quarantined and the sale cannot go through until Trade Me is

satisfied with the ticket seller’s response.

It is our belief that Trade Me is likely New Zealand’s safest place for the resale of

tickets as ultimately members who buy tickets under our buyer protection scheme

are covered from any loss.

Questions 10 - 13 re price caps on resale tickets

Trade Me is concerned by the proposal to introduce price caps. In particular, Trade

Me is concerned that the proposed price caps would be too costly to implement.

The logistics of requiring Trade Me to implement a system to account for a ‘face

value and / or fees' only sales mechanism, may mean Trade Me will be unable to

participate in the secondary ticket market.

It would be uneconomic for us to manually check the ticket details and price of every

ticket sold on Trade Me. For example, Trade Me does not allow the sale of tickets to

events that are subject to the Major Events Management Act, due to the resources

needed to monitor such events.

Trade Me is a market venue where hundreds of thousands of listings are made a

week, the vast majority of which no Trade Me employee casts an eye over as the

marketplace operates without friction, buyers and sellers agree on a price and

conclude their transaction.

Ticket prices for events vary widely. Pricing structures often feature different tiers

(e.g. A reserve, B reserve seating) and multiple pricing options (e.g. adult, child,

family, student, senior citizen). Ticket promoters may also reduce (or increase) ticket

prices for the same seat for events over time. Plus, not all ticket buyers use the

same services when purchasing tickets e.g. some use an app or, printed e-tickets,

some pick up physical tickets.

These services have different delivery fees. Processing fees for credit card or debit

card may apply which are not applied to cash payment. As a result, there would

usually be multiple different pricing caps to monitor for each event.

Trade Me believes it would be very difficult to code for each scenario, so we believe

that our compliance with a price cap regime would be extremely manual and

cumbersome. This would be almost certainly be unfeasible for Trade Me.

For example, we struggle to see how we could build an automated process to

determine the face value price for each ticket sold for, as well as the associated

ticketing service fees for each event, to ensure any sellers of tickets on our site are

meeting price cap obligations. Price caps could therefore make the activity of

facilitating secondary ticket sales uneconomic, without a material listing fee increase

for the specific category.

We expect that secondary ticket platforms related to primary ticket platforms would

have a competitive advantage if price caps were introduced. These platforms would

be able to build an automated process to check the original price of a ticket.

It’s worth noting that it would be difficult for Trade Me to build particular fields to

record particular ticket details. Our category structure is designed to work with

multiple marketplace categories. As the ticket sales section of Trade Me is a small

category, it’s unlikely to be economic to build specific functionality for this category -

and it would be difficult to get this work prioritised ahead of other Trade Me

Marketplace improvements.

Given the variables above, if a price cap mechanism was introduced, Trade Me

would have to reconsider its position in the ticket reselling market. It would be quite

ironic if the introduction of price caps (designed to produce a safer buying

experience for consumers) would result in Trade Me (arguably New Zealand’s safest

marketplace) being unable to participate in the market for ticket reselling.

Arguably, the unintended consequence of this proposed legislative change would be

to move buyers and sellers to other unregulated marketplaces and social media

where New Zealand regulation is overlooked and unenforced.

If a price cap was to be introduced we would support:

● price cap option C or an alternative option of a higher price cap. We think the

consumer should be able to recover at least their full cost. We would actually

support a higher cost which enables a consumer to make a profit. Price caps,

if implemented, should only prevent excessive profits being made.

● a mandatory requirement for the primary ticket seller to print/record the full

original ticket price (inclusive of any services fees) on the ticket to assist with

compliance enforcement - see comments on information disclosure below.

● additional requirements of primary ticket sellers being introduced (e.g. the

primary ticket seller offering a ticket verification service, and restricting the

ability for primary ticket sellers to void resold tickets).

Trade Me speculates a price cap would not have any effect on overseas-based ticket

resellers, as they appear to have little regard for the consumer protection legislation

in the markets in which they operate.

Accordingly, applying a price cap will arguably disadvantage local and reputable

resellers and not materially change the practices of overseas ticket resellers. It

would only serve to impact and place compliance costs on the New Zealand market.

Trade Me also considers that price caps should not be introduced as international

experience of price caps suggests regulatory intervention has not managed to solve

the problem.

Questions 14 - 16 re information disclosure

Trade Me supports information disclosure requirements in the event price caps are

introduced. We consider that there should be an obligation on the original ticket

seller to print/record the full original ticket price (inclusive of any service fees) on the

ticket and to be publicly transparent about these fees.

To avoid ticket scams, we think it’s important that the information disclosed is able to

be uploaded to a site like Trade Me (e.g. as an image) without the entry information

being disclosed (e.g. holder name and seat and barcode being disclosed). In our

experience, the disclosure of the entry information can lead to ticket scams.

If the information disclosure was in a pdf or image, then we envisage a lister could

transfer this to Trade Me as one of their listing images.

Questions 17-18 re ban on ticket-buying bots

We agree that ticket buying bots are increasing the size of the problem. But it will be

a difficult area to regulate. For example, would use of a crowdsourced marketplace

of human labour like Mechanical Turk count as use of a bot?

A ban on bot use to purchase tickets from New Zealand based primary ticket

resellers (or even secondary markets) works in principle, but enforcing it may be

more troublesome. We expect that most of the ticket-buying bots are based offshore.

As a result, the question of penalties is likely moot as jurisdiction issues will make

enforcement very problematic.

The reality is that no ticketing system can be wholly isolated from such attempts and

we believe most ticketing entities in New Zealand are likely experts already in

preventing such bot activity.

Bot activity is also increasingly sophisticated, primary ticket sellers face the constant

challenge of staying ahead of the technology in order to prevent or minimise effects

of bot use.

Rather than seeking to regulate against the use of bots, we would encourage you to

regulate for primary ticket platforms to use reasonable technical, security and other

measures to limit the number of ticket sales to any individual person (e.g. perhaps no

more than 10) and introduce a requirement for purchasers to capture some basic

identity information for each individual purchaser (for example, an NZBN for a

purchase by a New Zealand company).

Unfortunately identity and verification services are expensive (including systems like

RealMe developed by the New Zealand Government). So, requiring full verification

of purchasers is unlikely to be realistic.

Questions 19-20 re joint-industry government initiatives

We support further exploration of joint-industry government initiatives. It will be

important for the primary ticket sellers to be involved in these initiatives. Many

primary ticket sellers currently contractually prevent a ticket purchaser from reselling

their tickets. This means that purchasers in the secondary ticket market cannot

contact the primary ticket sellers for fear of their tickets becoming invalid. Ideally

primary ticket sellers, secondary ticket sellers and consumer groups will be involved

in considering improvements to prevent consumer harm.

It is useful for the government to also be involved in these conversations. As

arrangements to prevent consumer harm may impact on retail prices (e.g. the

industry choosing to collect additional identity information would involve additional

cost) competitors will be unwilling to have discussions about potential arrangements

for fear of inadvertently breaching the Commerce Act’s price fixing restrictive

provisions.

Conclusion

Poor consumer experience in the ticket reselling market is often an emotive issue,

especially for consumers who miss out on tickets due to a high price point in the

secondary market.

International experience suggests regulatory intervention has not managed to solve

the problems associated with secondary market purchasing.

Accordingly:

● Trade Me does not support the introduction of a price cap as it is our view that

a cap will not prevent ticketing scams from occurring and also because there

is also evidence from overseas markets that demonstrate that ticket price

caps do not work to address pricing concerns (as referred to in the discussion

document).

● Trade Me is concerned that there would be a potential for significant reduction

in consumer protection if Trade Me no longer operated in the ticket reselling

market due to compliance costs associated with ensuring compliance with a

price cap.

● Trade Me supports initiatives to prevent or curb bot activity on primary ticket

selling sites.

● We also support primary ticket sellers taking responsibility for minimising

illegitimate bulk buying practices, which Trade Me believes lead to tickets

being ‘scalped’ or on-sold for excessive prices by unscrupulous dealers, via

unregulated overseas secondary markets and ticket resellers.