FTC Fines Ticket Brokers $5 Million in Scalping Settlement

FTC Fines Ticket Brokers $5 Million in Scalping Settlement
Photo: Ishara S. Kodikara, Getty Images
To sign up for our daily newsletter covering the latest news, features and reviews, head HERE. For a running feed of all our stories, follow us on Twitter HERE. Or you can bookmark the Gizmodo Australia homepage to visit whenever you need a news fix.

U.S. federal authorities have brought their first-ever case under a 2016 anti-bot law to crack down on ticket scalpers. Three New York-based ticket brokers were ordered to pay $US3.7 ($5) million in fines after allegedly making millions of dollars through bot-powered ticket reselling schemes, the U.S. Federal Trade Commission announced Friday.

The companies — Cartisim Corp., owned by Simon Ebrani; Just In Time Tickets, owned by Evan Kohanian; and Concert Specials, owned by Steven Ebrani — are accused of scooping up more than 150,000 tickets from Ticketmaster to resell at a premium. In total, the three earned a whopping $US26.1 ($34) million in estimated revenue, according to the complaints. The FTC says they allegedly used automated ticket-buying software, tools to hide their IP addresses, and an army of hundreds of fake accounts and credit cards among other methods to circumvent Ticketmaster’s purchasing limits and safeguards designed to detect nonhuman visitors.

FTC regulators added that these are the agency’s first enforcement actions brought under the Better Online Ticket Sales (BOTS) Act, an anti-bot law passed in 2016 banning ticket scalpers from using automated means to purchase tickets in bulk and evade purchasing caps.

“These ticket brokers used bots and other technical tricks to scoop up thousands of tickets to popular events as soon as they went on sale,” said the director of the FTC’s Bureau of Consumer Protection, Andrew Smith, in Friday’s announcement. “Not only does this deprive loyal fans of the chance to see their favourite performers and shows, it is against the law.”

The three ticket brokers originally faced more than $US31 ($40) million in civil penalties for BOTS Act violations under a proposed settlement with the FTC. But federal regulators agreed to suspend the bulk of these fines due to the companies’ inability to pay — so long as they abide by certain terms. Moving forward, the defendants could be on the hook for the full amount if it’s found that they either violated the BOTS Act again, fudged their financial documents to qualify for the suspended settlement amount, or failed to routinely provide authorities with up-to-date records and compliance reports. Once a judge approves these news terms, Concert Specials will pay about $US1.56 ($2) million, Just in Time Tickets about $US1.64 ($2) million, and Cartisim Corp just under $US500,000 ($647,600) to the U.S. Treasury.

So what events were these scalpers even going after, anyway? The FTC’s complaints don’t go into much detail except that their alleged targets included several sporting events and musical performances, including Elton John concerts. So if you got priced out of seeing the “Rocket Man” live, I guess you now know who to blame.