In a new lawsuit, Washington, D.C., Attorney General Brian L. Schwalb has leveled serious accusations against online events platform StubHub, alleging that the company engages in predatory sales tactics to mislead consumers into paying more for tickets.
The lawsuit contends that StubHub hides mandatory fees until the final stages of a purchase, resulting in costs that can increase by as much as 40%. This practice, known as drip pricing, is at the heart of the complaint, which claims that StubHub’s actions violate the District of Columbia’s Consumer Protection Procedures Act.
The lawsuit asserts that StubHub’s drip pricing deceives consumers by initially displaying a low price and then adding fees later in the purchasing process. According to Schwalb, this method not only misleads buyers but also breaches the law, which mandates that merchants provide accurate information about the products they sell. Furthermore, the complaint highlights that StubHub fails to clearly explain the purpose of these ticket fees or how they are calculated, creating confusion and distrust among consumers.
Adding to the contentious nature of StubHub’s practices is the company’s use of a transaction countdown clock. This feature is alleged to induce a false sense of urgency, pressuring shoppers into completing their purchases hastily. The clock, along with the numerous screens consumers must navigate to finalize a purchase, contributes to an environment where buyers feel compelled to proceed despite unexpected fee increases.
In response to the lawsuit, StubHub has defended its practices, stating that their platform is transparent and competitive. “We are disappointed that the DC Attorney General is targeting StubHub when our user experience is consistent with the law, our competitors’ practices, and the broader e-commerce sector,” the company said in a statement. StubHub also expressed support for federal and state measures that enhance existing laws to protect consumers, such as requiring all-in pricing across all platforms.
The lawsuit against StubHub comes amid growing scrutiny of drip pricing practices by lawmakers and consumer advocates. This retail tactic, which involves adding undisclosed fees to a purchase, has been criticized for its potential to deceive consumers and inflate costs. Schwalb’s office estimates that consumers in Washington, D.C., have paid a staggering $118 million in hidden fees to StubHub.
The deceptive nature of drip pricing was explained by Schwalb in an interview with CBS News. He described how companies, including StubHub, lure consumers with low initial prices, only to alter the terms of the transaction as the process continues. This can involve navigating through dozens of screens, creating a prolonged and often frustrating buying experience. Schwalb emphasized that such tactics are designed to prevent consumers from abandoning their purchases, with features like the countdown clock adding to the pressure.
Consumer advocates argue that drip pricing exploits shoppers’ tendencies to overestimate the effort required to start a new search for a better deal. This psychological manipulation often results in consumers agreeing to pay more than they initially intended. Vicki Morwitz, a marketing professor at Columbia University’s Graduate School of Business, noted that this practice is not only detrimental to consumers but also harms honest competitors who do not engage in such tactics.
One example highlighted in the lawsuit involved tickets to an Usher concert. Initially advertised at $178 each, the final price per ticket surged by approximately 40% after StubHub added fulfillment and service fees. These fees, the lawsuit alleges, are often unrelated to the services they claim to cover and lack transparency in how they are calculated.
This is not the first time StubHub has faced legal challenges over its pricing practices. A January class action suit similarly accused the platform of hiding the final cost of tickets from customers. Other companies, such as hotel chains, have also settled lawsuits related to drip pricing, indicating a broader issue within the retail and service industries.
As the battle against deceptive pricing practices continues, the outcome of this lawsuit could set a significant precedent for consumer protection in the digital marketplace. Schwalb’s office aims to halt StubHub’s controversial tactics and recover the $118 million in fees paid by Washington, D.C., consumers, highlighting the broader commitment to safeguarding consumer rights against unfair business practices.
