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StubHub settles with US Attorneys General over its COVID refunds policy

By | Published on Thursday 16 September 2021


StubHub has formally agreed that it will pay out an estimated $16 million in cash refunds to consumers in ten US states who were impacted by the ticket resale platform’s decision to change its refunds policy as the COVID lockdown got underway last year. The secondary ticketing company has blamed cash flow issues and the UK regulatory investigation into its merger with Viagogo for that decision to alter its policies regarding refunds on cancelled shows.

The whole ticketing sector faced big challenges in 2020, of course, as an unprecedented number of shows were cancelled and postponed as the COVID pandemic forced the shutdown of the live industry. This put the spotlight on the refund policies of different ticketing companies – and what consumer rights law says in different countries and states about the obligations of promoters and ticket sellers to provide cash refunds.

The challenges were arguably even bigger for ticket resale services like StubHub, because they are one step removed from the promoters who are cancelling or postponing the shows, their tickets coming from touts. Platforms like StubHub also tend to make a bigger deal about their refund guarantees, to overcome consumer concerns about buying tickets from unofficial sellers.

StubHub’s efforts to tackle those challenges came into the spotlight when it was sued in the US in April 2020. In that lawsuit, it was claimed that StubHub’s pre-COVID policy was to offer cash refunds to anyone who bought tickets from resellers on the secondary ticketing platform to a show that was then cancelled. However, as the COVID-19 shutdown kicked in, it started offering the option of taking a voucher worth 120% of the price of the cancelled ticket.

And then, on 25 Mar 2020, terms were changed on the resale firm’s website so that ticketholders could be forced to take the voucher instead of cash – at “StubHub’s sole discretion” – unless the ticket was bought in a country where consumer rights law obliged the ticketing firm to provide a cash refund.

It was that change that led to the class action lawsuit in the US courts. That lawsuit stated: “As a result of defendants’ abrupt and illegal about-face at least tens-of thousands of their customers have been and/or will be cheated out of refunds to which they are legally entitled for thousands of different events”.

The change to StubHub’s refunds policy was subsequently investigated by Attorneys General in multiple US states. Following those investigations, in May this year StubHub started to offer cash refunds to people who had bought tickets before 25 Mar 2020 for shows that were subsequently cancelled and who had previously been told that only vouchers were available as compensation.

This week a series of formal settlements with an assortment of Attorneys General across the US were published making StubHub’s commitment to offer cash refunds to eligible ticket-buyers official.

Those settlements include a explanation as to why StubHub changed its refunds policy in March 2020, and why it couldn’t turn to Viagogo – which bought the company for $4 billion shortly before the pandemic – for help when it hit cash flow problems as the number of cancellations started to spike.

The settlements state: “StubHub contends that it was unable to refund all eligible buyers prior to 3 May 2021 due to the unforeseen impact that the COVID-19 pandemic had on its business and the live in-person event industry, including a near complete loss of revenue, an inability to recoup cash refunds from ticket sellers, and an order from the United Kingdom’s Competition & Markets Authority preventing StubHub from merging or even communicating about StubHub’s business with its new parent company, Viagogo, which purchased StubHub in February 2020”.

As the settlements were published, plenty of AGs took the opportunity to criticise StubHub’s response to the challenges caused by the pandemic. Washington DC Attorney General Karl A Racine said: “By refusing to issue full refunds on cancelled events during the pandemic, StubHub not only violated its policy but also violated the trust of its consumers”. Meanwhile Mark R Herring, AG in Virginia, added: “The COVID pandemic should not be used as an excuse to withhold refunds owed to customers for cancelled events”.

For its part, a StubHub spokesperson told Law360: “Putting fans first has always been central to the StubHub business … adjusting our refund policy for canceled events during the pandemic was a difficult decision, but a necessary one at the time. As soon as circumstances allowed, StubHub achieved its goal of providing impacted customers the choice to keep the 120% credit they were issued when their event was canceled or receive a cash refund”.

“We appreciate the patience of our customers, partners and regulators as we worked toward providing that choice, and we appreciate the ongoing dialogue with the states as we worked to formalise the actions StubHub voluntarily took beginning in May 2021 through this multi-state agreement”, the spokesperson added.

The CMA investigation into Viagogo’s purchase of StubHub concluded last week. As part of a settlement with the regulator, Viagogo will sell all of StubHub’s operations outside North America to Digital Fuel Capital.