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In the most recent case of financial intrigue bubbling up following the leak of the Paradise Papers, an investigation by the CBC and the Toronto Star uncovered evidence of a multi-million dollar ticket scalping operation that StubHub not only permits but incentivizes. And now the ticket reselling platform’s offices have been raided by authorities.
News outlets are still combing through the Paradise Papers — financial records leaked to a German newspaper that detail offshore tax haven practices — and most of the attention has gone to big names like Commerce Secretary Wilbur Ross and the Queen of England.
But the name Julien Lavallée probably doesn’t ring a bell.
The CBC reports that Lavallée’s finances appear in the documents with further research showing that he runs an enormous ticket scalping operation from his home base in Quebec. According to the news outlet’s analysis, the business appears to use bots that rapidly snatch up tickets to events around the world to sell them on StubHub.
In one example, the CBC analysed sales records for three Adele concerts in the UK. Lavallée’s name and those of his friends and family members reportedly appear hundreds of times, connected to ticket sales in cities around the world. The face value of the 310 tickets, purchased from 12 different locations, came out to a whopping $US52,000 ($67,680). The CBC says those purchases only took 25 minutes to complete. From the report:
“The speed of the transactions — this isn’t somebody sitting there typing details over and over again,” said Reg Walker, a U.K. event security specialist hired by some of London’s biggest concert venues.
[…]
Lavallée’s name is very familiar to Walker. He says he’s spotted Lavallée targeting tickets for many U.K. concerts and suspects the Canadian is using multiple identities and aggressive software, known as bots, to trick the system.
Walker says there is no legal way for people located in the U.K. to “harvest” tickets.
“If you pretend to be multiple consumers, or if you pretend to be a consumer and you are acting as a business, it’s a criminal offence.”
Countries, states, and provinces around the world have different laws regarding ticket scalping. For the most part, in the US, it’s a legal practice. There’s no federal ticket scalping law and each state has its own individual restrictions. The “Better Online Ticket Sales Act of 2016,” however, made it illegal nationwide to use bots to vacuum up tickets at a rapid rate.
StubHub requires users to “follow all relevant laws,” but the existence of a password-protected Top Seller portal shows that the ticket reseller site is apparently more than happy to reward sellers who are scalping enormous numbers of tickets — volumes that likely couldn’t be achieved without the use of bots.
According to StubHub’s Top Seller Handbook, a high-volume reseller who is invited into the program can receive significant discounts on the 10 per cent fee that StubHub applies to transactions. Gross ticket sales of between $US250,000 ($325,385) and $US5 million ($6.5 million) entitle participants to increasingly greater reductions of StubHub’s commission. According to Walker, StubHub said Lavallée was “one of their biggest global resellers.”
The idea that a reseller on StubHub could possibly be making $US5 million ($6.5 million) in sales through filling out forms one-by-one on TicketMaster is a stretch. In a statement to the CBC, StubHub responded to the report:
StubHub agrees that the use of bots to procure tickets is unfair and anti-consumer. StubHub has always supported anti-bots legislation and encourages policy-makers to look comprehensively at the host of factors that impact a fan’s ability to fairly access, buy, resell, or even give away tickets in a competitive ticket market.
Ultimately, however, StubHub will have to tell it to investigators at the UK’s Competition and Markets Authority. On Thursday, authorities with that agency raided Stubhub’s London office. Three other online ticket retailers were also targeted in a crackdown that’s part of a year-long investigation into the industry’s practices.
According to The Guardian, officials “are understood to have seized data relating to StubHub’s ‘top seller’ programme, which manages its relationships with industrial-scale ticket touts selling tickets at vast mark-ups.”
In a statement, Lavallée’s lawyer told the CBC his ticket company “carries out all its activities in accordance with the laws and rules of the jurisdictions in which it operates and sells.” Gizmodo has reached out to StubHub for comment on the CBC and UK investigations, and we’ll update this post when we receive a reply.
Online ticket sales are a complicated issue. The law wants to protect customers who would like to buy a ticket, but it also wants to protect those who need to sell one. But using bots to purchase numerous tickets at a time isn’t nearly as murky. In addition to being illegal in many countries, most big ticket sellers have purchase limits for individuals and security measures aimed at preventing the use of bots.
Just last month, Ticketmaster filed a federal suit against a ticket broker who allegedly used bot software to buy 30,000 tickets to Hamilton, violating the site’s terms of use. The question is whether authorities will hold StubHub (and its parent company eBay) legally liable for encouraging those kinds of violations.
[CBC]