Illegal Ticket Bots, Websites Settle With State Of New York For $4.2M

Music festival and concert goers everywhere are getting ready to head to shows with summer just around the corner, but ticket buying remains the biggest hurdle for most concerts. Typically, you’ll have to fend off elevated prices and low inventory from scammers, ticket buyers and bots that game the ticket-buying system.

However, regulators are looking to improve the market for individual buyers. The office of New York Attorney General Eric Schneiderman announced Thursday $4.2 million in settlements with seven companies that used bots and other tools to purchase and sell concert tickets illegally.

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In a post announcing the settlements, Kathleen McGee, chief of the Bureau of Internet and Technology, and assistant attorney general Aaron Chase detailed the investigation’s findings.

Generally, tickets were often put on hold for industry insiders and special groups before general sales even started:

"Before a member of the public can buy a single ticket for a major entertainment event, on average, up to half of the available tickets are either put on 'hold' and reserved for a variety of industry insiders including the venues, artists or promoters, or are reserved for 'presale' events and made available to nonpublic groups, such as those who carry particular credit cards. If you’re not an insider, you may be out of luck."

In addition, firms often use bots to break CAPTCHAs — programs or systems intended to distinguish human from machine input — and other verification tools to buy large numbers of tickets quickly and sell them at high markups.

"When tickets are released, brokers buy up as many desirable tickets as possible and resell them at a markup, often earning individual brokerages millions of dollars per year. To ensure they get the tickets in volume, many brokers illegally rely on bots to purchase tickets at high speeds. As the New York Times reported, Ticketmaster has estimated that '60 percent of the most desirable tickets for some shows' that are put up for sale are purchased by bots.

"Our research confirms that at least tens of thousands of tickets per year are being acquired using this illegal software. Brokers then mark up the price of those tickets  —  by an estimated 49 percent on average, but sometimes by more than 1,000 percent  —  yielding easy profits. In at least one circumstance, a ticket was resold at 7,000 percent of face value.

"Finally, some brokers sell 'speculative tickets,' meaning they sell tickets that they do not have but expect to be able to purchase after locking in a buyer. Speculative tickets are a risk for consumers and also drive up prices even before tickets are released."

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Schneiderman’s office also noted it secured $7.1 million in settlements from companies using illegal ticket-buying software. In addition, the office noted New York enacted legislation that adds additional criminal penalties onto existing civil penalties for brokers caught using illegal ticket-buying software.