U.S. News

New York attorney general sued over concert ticket sales

NEW YORK (Reuters) - Two companies from the concert, sports and theater ticket industry filed separate lawsuits against New York Attorney General Barbara Underwood on Thursday to stop her from suing them over what they called the “lawful” sale of tickets not yet in inventory.

The lawsuits by Ticket Galaxy and TicketNetwork Inc came 2-1/2 years after Underwood’s predecessor Eric Schneiderman said his multiyear probe into the industry had uncovered hoarding, inflated surcharges and favoritism to insiders that made it difficult for ordinary people to buy affordable seats.

Ticket Galaxy, which resells tickets, and TicketNetwork, which runs an online marketplace for ticket resales, said it is entirely normal for companies to sell tickets they expect to eventually receive, a practice known as “drop shipping,” and for such transactions to be handled online.

But they said Underwood has threatened to sue them unless they cough up millions of dollars in penalties, based on her mistaken belief that the practice defrauds consumers into thinking that sellers have their tickets in hand.

The companies said adopting that view could reduce competition and boost prices, and disrupt the online models of companies such as Inc and eBay Inc, as well as businesses that engage in drop shipping regularly.

“The attorney general’s view is ill-conceived, legally meritless and, if adopted, would lead to a serious disruption of common business practices across many industries,” TicketNetwork said in its complaint.

Amy Spitalnick, a spokeswoman for Underwood, said in an email: “Speculative tickets harm both consumers and the industry as a whole - driving up ticket prices and defrauding consumers by leading them to believe they are buying an actual ticket, rather than making a bet on the seller’s ability to deliver the ticket for which they paid. We will respond to this baseless lawsuit in court.”

Ticket Galaxy and TicketNetwork, both based in South Windsor, Connecticut, want court orders declaring their ticket practices legal, after talks with Underwood’s office ended in impasses.

They filed their lawsuits in the New York State Supreme Court in Manhattan.

Schneiderman resigned in May after being accused of physical abuses toward women. He has denied those accusations.

Reporting by Jonathan Stempel in New York; Editing by Tom Brown