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Business News Legal Live Business
Eventbrite sued over COVID-19 refunds policy
By Chris Cooke | Published on Thursday 11 June 2020
Eventbrite is the latest company in the live sector to be sued in the US over its refund policies in the wake of the COVID-19 pandemic. Three ticket-buyers claim that the self-service ticketing platform is passing the buck regarding refunds on cancelled and postponed shows to each event’s organiser, adding that the refund policies of both those organisers and the ticketing firm itself violate Californian law.
The entire live industry, of course, has been dealing with an unprecedented number of cancelled and postponed shows as a result of the COVID-19 shutdown.
Whether ticket-holders can automatically claim a cash refund for those shows will depend on each promoter’s terms and conditions and what local consumer rights laws say. Policies are also often different for cancelled shows and postponed shows – which can pose interesting questions when a festival is basically cancelled, but organisers insist it has in fact been postponed by twelve months.
In the US – where consumer rights law is less clear cut on these matters and often differs from state to state – festivals Ultra and South By Southwest have both been been sued over their refund policies, as have Live Nation’s ticketing company Ticketmaster and secondary ticketing site StubHub. The latter is also facing legal action in Canada.
Eventbrite is being sued by Sherri Snow, Anthony Piceno and Linda Conner, who each bought tickets via the ticketing firm’s website for different events. All three of those events were then postponed as a result of COVID-19 – two have been postponed to specific new dates later in the year, while one is yet to have a new date confirmed. All three want to cancel their tickets and get a cash refund.
In their lawsuit, which seeks class action status, they describe how Eventbrite allows event organisers to set their own refund policies on its platform, including a no refunds policy. Although, Eventbrite terms stress, “refund policies must be in accordance with all applicable local, state, provincial, national and other laws, rules and regulations”.
And “refund policies (including ‘no refund’ policies) must provide for a refund or other make good for failure to provide the advertised goods and services (eg event cancellation)”.
Critiquing Eventbrite’s rules, the lawsuit takes particular issue with the get-out that event organisers can provide an “other make good” if an event is cancelled, rather than a cash refund.
“Eventbrite’s requirement that an organiser ‘make good’ for a failure to provide the goods and services is meaningless nonsense, which frustrates the entire policy”, the lawsuit states, also noting that even that vague obligation doesn’t apply to postponed events.
All three of the plaintiffs live in California, and two of the shows they booked tickets to were in that state as well. Which is why, for them, what California law says about refunds is of relevance.
“Section 22507 of California’s Business And Professions Code, which applies to all Eventbrite ticket purchases”, they write, “requires that the ‘ticket price of any event which is canceled, postponed, or rescheduled shall be fully refunded to the purchaser by the ticket seller upon request'”.
This requirement, they go on, means Eventbrite’s ‘make good’ requirement on cancelled shows “has unlawful limitations”. Restating that point later in the legal filing, they add: “Even when adhered to, Eventbrite’s minimum refund requirements do not comply with California law, including the lack of a mandatory refund for events that are canceled, rescheduled, or postponed”.
Of course, assuming Californian law does require a cash refund when events are cancelled, there is then the question as to whether the obligation to provide that refund applies to Eventbrite as well as the event’s promoter, especially if Eventbrite has already handed over the ticket sale money to the promoter before cancellation or postponement occurs.
Since the COVID-19 shutdown has begun – and in the context of the various controversies around refunds – many ticketing companies have been keen to stress that they are simply transactional platforms and that refunds are therefore the responsibility of their real clients, ie promoters or sellers.
To what extent that is true is debatable, and in some countries consumer rights law explicitly states that everyone in the value chain is responsible for ensuring refunds are issued. Though, to be fair, Eventbrite more than most ticketing firms is very much a transactional platform available to any event organiser, and therefore it operates in a slightly different way to more traditional ticket agents.
And while Eventbrite’s more bespoke requirements of event organisers may not comply with Californian law, those requirements come with that proviso that each organiser’s refund policy “must be in accordance with all applicable local, state, provincial, national and other laws, rules and regulations”.
It remains to be seen how the ticketing firm responds to the litigation. Confirming that it was being sued on this issue in a filing with America’s Securities & Exchange Commission, the company simply said that it intends to “vigorously” fight the lawsuit.
The legal battle is one of a number of challenges facing Eventbrite as it, like all of its competitors, continues to navigate the COVID-19 shutdown and deal with the insecurity of not really knowing when the live sector will return to something nearing normal.
Having announced significant cutbacks in April to help it weather the storm, the company has now announced a plan to raise $115 million in debt finance through the issuing of convertible senior notes. That resulted in another dip in the company’s share price this week, although it is still above it’s lowest ebb to date that occurred just before those cost-saving measures were announced.
