Viagogo to pay $7 million penalty for ‘industrial scale’ misrepresentations

Viagogo sells tickets for concerts, sport and theatre on its online ticketing platform. But it crossed the red line when it masqueraded as the ‘official’ seller of tickets, when it was only a reseller, and ‘hid’ its 27.6% booking fee until the time came for payment.

The ‘red line’ is the Australian Consumer Law and the consequences were a $7 million penalty, an injunction and a compliance program ordered by the Federal Court of Australia.

The judgment is Australian Competition and Consumer Commission v viagogo AG (No. 3) [2020] FCA 1423 (2 October 2020) (Burley J). It is the penalty judgment.

The contraventions of the Australian Consumer Law

The Court summarised viagogo’s business in this way:

“The viagogo Australian website is viagogo’s virtual shopfront in Australia. It is the place where consumers see what it has on offer and, by navigating through it, can learn about available tickets for specified events and then acquire them.”

In the earlier liability judgment, the Court identified four contraventions of the Australian Consumer Law (ACL) on viagogo’s Australian website – www.viagogo.com.au.

1. Viagogo represented that it was the “official” agent of the performer or promoter and consumers could purchase original tickets from it when in fact it was not affiliated with the performer or promoter and the tickets were resold. (the Official Site Representation)
    
2. At each stage in progressing through the site, the consumer was given “hurry up” messages to create the impression that tickets were running short when in fact it was only the seats that viagogo had available on its website that were limited. (the Quantity Representations)
    
3. On the “Tickets and Seating Selection Page”, the consumer was given the impression that the price displayed was the total price when in fact additional fees were payable. (the Total Price Representation)
    
4. On the “Delivery Page”, the ticket price was displayed as a single figure without specifying that it included the additional fees payable. (the Part Price Representation)

Example – this is a screenshot of the “Delivery Page” which warns ‘only a few tickets left’ and displays a price per ticket of $135 (without the booking fee of $42.45 added).

For my case note on the liability judgment see: Four internet marketing and price transparency lessons from the viagogo decision in the Federal Court

Penalties and other orders

The Court found that the contraventions were very serious. It made scathing comments on the cavalier approach viagogo took to its obligations under the Australian Consumer Law.

The Court took into account these factors in assessing penalties:

• “I accept that the number of clicks on the viagogo ad [on Google] indicates that there was a very large number of incidents where consumers were exposed to the Official Site Representation.” “The number of people who entered a transaction is very large.”
   
• “Having regard to the frequency of the representations, and the manner in which they pop up on the screen, in my view the Quantity Representations are not likely to have escaped the attention of any consumer. The representations were on an industrial scale for the relevant period.”
   
• “The [Total Price] representation was made at a significant time in the journey of the consumer through the website, when the consumer was invited for the first time to click on the “buy” option for the tickets.”
   
• “Consumers were … subjected to the [Part Price] representations on the Delivery Page, and were drawn further into the transactional web as a result of the representations.”
   
• “In assessing penalties … I take into account that … Viagogo is a substantial worldwide corporation which had significant revenue in Australia in 2017… which provides some indication of the order of magnitude of harm caused.”
   
• “[The contravening conduct] demonstrates a level of deliberateness on the part of viagogo that tends in favour of the need for a significant penalty to deter it from further such conduct. Viagogo’s responses give it the appearance of being a company that is indifferent to the interests of Australian consumers and which prefers to elevate its own profit motives above those interests, even when on notice of the potential for harm being done.”
   
• “There was no material corporate culture of compliance with the ACL. Indeed, viagogo conducted its operations on the internet via its website in a manner that indicates a disregard for the ACL.”
   
• “Viagogo’s corrective action [to change its website] was taken very late [some time after the delivery of the liability judgment] and for it was the legal equivalent of drawing teeth.”
   
• “A strong need for specific deterrence is required. Furthermore, there is a need for a strong signal to be sent to other corporations which conduct internet based operations that, despite the borderless operation of the internet, they are nonetheless subject to the ACL when they conduct business in Australia.”
   
• “In my view condign penalties are:
  (1) Official Site Representation: $2.5 million;
  (2) Quantity Representations: $2.5 million;
  (3) Total Price Representation: $1.5 million; and
  (4) Part Price Representation: $500,000.
  The cumulative total of penalties above is $7 million.”

The Court ordered that viagogo be restrained for five years from making representations of the kind that contravened the ACL.

The Court ordered that viagogo submit an ACL compliance program, and maintain and continue that program for three years.

The Court ordered viagogo to pay the ACCC’s costs of the proceedings.

Comments

The ACCC received 1,990 complaints in relation to the viagogo representations.

The high level of complaints the ACCC receives about online ticket sellers for events has led it to publish a special guide for consumers – Buying tickets online.

In that guide, the ACCC gives advice such as:

• Buy your ticket from an authorised ticket seller
   
• Don’t trust search results alone
   
• Avoid resellers and scammers
   
• Paying for tickets by credit card means you can ask for a chargeback if you do not receive what you paid for
   
• Tips for getting the best tickets such as: sign up for alerts, creating an online account, keep checking for additional dates or seats for ‘sold out’ events and check ticket restrictions

Marketing Commentary by Michael Field from EvettField Partners

Viagogo deliberately deceived consumers and ignored the Australian Consumer Law. It is clear they knew what they were doing as their marketing exploited well-known psychological flaws in consumer buying and decision-making behaviour.

Their marketing preyed on the heightened emotions consumers experience when purchasing leisure and entertainment opportunities online, namely FOMO (Fear Of Missing Out) and must buy (from viagogo as the only authorised ticket seller).

This marketing strategy is an abject failure. A simple Google search on the search term ‘Viagogo’ reveals an alarming number of ‘negative’ search results, including damning reviews on consumer feedback sites. Trustpilot.com rates viagogo a shockingly low score of 1.7 out of a possible 5 stars, calculated from approximately 31,000 consumer reviews. In addition, the viagogo Wikipedia page has dedicated sections on ‘Criticisms’ and ‘Legal and Government Actions’ which occupy 10 times more article space and word count than their ‘Business Model’ section.

International companies contemplating entering Australia must properly research and understand the local laws and regulations, in particular the Australian Consumer Law. The damage now done to the viagogo brand, which is based in Switzerland, is amplified by the $7 million penalty. The damage could have easily been avoided by a proper understanding of and compliance with the Australian Consumer Law.

The cost of incurring the wrath of the Australian Consumer Regulator, the ACCC, the penalty, and the massive brand damage caused would pale into insignificance compared to a comparatively modest investment of obtaining the right legal advice from a specialist Australian legal firm with experience in the sector.

© Copyright 2022 Cordato Partners