The

U.S. Federal Trade Commission

and seven states sued Live Nation Entertainment Inc. and

its Ticketmaster subsidiary

for failing to stem the use of automated ticketing bots and large-scale resale operations in a lawsuit that could see the ticketing giant face billions of dollars in penalties.

The consumer protection agency said the nation’s largest ticketing platform failed to enforce its own purchase limits, which allowed resellers to buy up large numbers of passes for popular events, according to a lawsuit filed in California federal court Thursday. The agency said that Ticketmaster systematically ignored ticket brokers that bypassed its limits since it earns money from resales.

“The company routinely chooses to turn a blind eye to broker circumvention of ticket limits,” the FTC said in its complaint. Ticketmaster’s “unlawful conduct and tacit coordination with brokers injures fans, who have paid far more than the advertised ticket price for both box office and resale tickets, and who are forced to pay inflated resale prices for high-demand tickets.”

Live Nation shares closed down 2.8 per cent at US$164.68 in New York.

Live Nation didn’t have an immediate comment.

FTC Chair Andrew Ferguson said

in an interview on CNBC

that Ticketmaster has misrepresented the number of tickets available and deceived consumers about the full costs of purchases.

“Ticketmaster has not been honest about its pricing,” he said.

Ticketmaster can “triple dip” on fees, the FTC alleged, since it earns money on the first ticket sale as well as from both the buyer and seller on resales. On the first sale, the FTC said, fees averaged between 24 per cent and 44 per cent, requiring consumers to pay US$16 billion, much of which is retained by the company.

All told, Ticketmaster took in US$11 billion in fees on primary and resold tickets between 2019 and 2024, the FTC said.

The agency said Ticketmaster’s actions violated both the FTC Act, which bars deceptive conduct, as well as the Better Online Ticket Sales Act, or BOTS Act, which was passed in 2016 to prevent large-scale ticket scalping by banning the use of bots, or automated methods of circumventing per-person ticket limits. A judgment against Ticketmaster could amount to billions of dollars as the law allows potential penalties of more than US$53,000 per violation.

Ticketmaster studied the potential financial impact of enforcing its ticket limits on brokers in 2020, according to the complaint. That analysis found applying the limits would cut the number of resold tickets by 5 million per year, and cause a “significant” impact on revenue, reducing it by at least US$220 million.

Ticketmaster was aware that the majority of tickets resold on its platform were purchased by brokers and then listed for resale, sometimes at twice the original cost or more, the agency said. For example, the FTC found one broker who purchased 772 tickets to a 2023 Coldplay concert for US$81,000 then resold them for more than US$170,000. That same broker bought 612 tickets to a 2023 concert by country music star Chris Stapleton for US$47,000 and then resold them for more than US$89,000.

The FTC has redoubled its scrutiny of ticket sales under the Trump administration after the White House issued an executive order in March directing the agency to prioritize enforcement of the BOTS Act. The order mandates a report on how agencies are complying by the end of September.

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Last month, the agency sued a Maryland-based ticket broker for violating the BOTS Act on ticket purchases to Taylor Swift’s Eras Tour. The company has denied wrongdoing, saying the FTC has adopted an overly expansive interpretation of the law.

The FTC lawsuit adds to the company’s string of legal woes. The Justice Department and dozens of state attorneys general filed a lawsuit seeking to break up Live Nation and Ticketmaster that’s scheduled for trial in March. The department also has an ongoing criminal antitrust probe into whether the company colluded with rivals at the onset of the pandemic over refund policies for canceled concerts.

With assistance from Josh Sisco

Bloomberg.com