Ticket resale platform StubHub calls itself a “marketplace for fans to buy and sell tickets”. But that positioning as a simple fan-to-fan exchange became a little awkward for the company last week when it was revealed that CEO Eric Baker has a side hustle running a separate company that is directly involved in touting tickets and which provides finance to industrial-scale ticket touts who sell tickets on StubHub.
That close connection between StubHub US and super-touts is problematic for the ticket resale business in terms of its ongoing bid to stop increased regulation of secondary ticketing. But does it also mean that the company is liable for fraudulent concealment, misrepresentation and unjust enrichment?
A StubHub customer called Louis Sanquini reckons it does, so much so he’s filed a class action lawsuit with the courts in New York targeting StubHub Inc and Baker himself.
By claiming to be a neutral “marketplace for fans to buy and sell tickets”, his lawsuit states, StubHub misleads consumers into thinking it is a platform that “merely connects individual fans who can no longer use their tickets with other fans who want them”.
When, “in truth’, the lawsuit adds, according to StubHub’s own filings with the US Securities And Exchange Commission, “Eric Baker is also the part owner and Managing Director of Andro Capital, an entity that has sold tickets on StubHub's own platform since approximately 2008”.
StubHub’s “failure to disclose this conflict of interest” to consumers as well as investors, while “marketing StubHub as a fan-to-fan marketplace” deceived Sanquini and other ticket buyers and “caused them to pay prices, and accept terms, they would not have accepted had the truth been known”.
Ever since online ticket touting first became controversial in the mid-2000s, one of the tactics employed by touting platforms like StubHub is to stress that they are primarily marketplaces where fans who buy tickets to a show but can no longer attend, and who can’t get a refund from the event’s promoter, can sell their tickets on to another fan.
However, as anti-ticket touting campaigners have long pointed out, most of the tickets sold on these platforms are listed by professional industrial-level touts, who hoover up tickets for in-demand events as soon as they go on sale and then resell them for a massive mark-up.
Critics have also pointed out that the platforms are fully aware of how reliant they are on these professional resellers. So much so the platforms have offered said professional sellers extra benefits and tools to help them run and grow their ticket touting businesses. At various points this cosying up of resale platforms with professional sellers has been exposed and caused a little bit of outrage.
Baker’s involvement in Andro Capital was uncovered via an investigation by CBC last week. It revealed that StubHub had told the broadcaster that the company “does not own, possess or sell tickets. We are a technology platform that connects independent buyers and sellers - think: eBay”.
And yet filings made with the SEC since StubHub Inc listed on the New York Stock Exchange last year show that Baker “not only runs the giant resale platform, but is also part owner and Managing Director of Andro Capital, a fund that sells millions of dollars worth of tickets on StubHub”.
Technically StubHub’s statement to CBC wasn’t incorrect, given it’s Baker’s other company that is more closely involved in reselling tickets and financing touts.
However, the revelation further destroys the narrative that StubHub - and Viagogo, which StubHub Inc also operates - are primarily fan-to-fan ticket exchanges. Which helps those calling for new regulations that put price caps on touted tickets - or just outright ban for-profit resale - including in the US.
Though whether StubHub claiming to be a fan-to-fan marketplace while Baker is directly involved with the super-touts constitutes concealment, misrepresentation and unjust enrichment under the laws of New York State is debatable. But Sanquini’s litigation will put that debate in the spotlight.