From the U.S. Government Accountability Office, www.gao.gov Transcript for: Online Ticket Sales Description: What's it like buying tickets online? GAO explores hidden fees, purchasing bots, and reseller markups. Related GAO Work: GAO-18-347: Event Ticket Sales: Market Characteristics and Consumer Protection Issues Released: May 2018 [ Background Music ] [ Mike Clements: ] When you think about that primary sale, the consumer's competing against ticket brokers. [ Matt Oldham: ] Welcome to GAO's Watchdog Report, your source for news and information from the U.S. Government Accountability Office. I'm Matt Oldham. We've all been there, your favorite band is coming to town and you go online to order tickets as soon as they're available, only to discover they sold out in seconds or you have no problems ordering tickets that are $30 face value but when you go to pay somehow you owe $41.68. I'm sitting with Mike Clements, a director in our Financial Markets and Community Investment team to talk about GAO's recent report on online ticket sales. Mike, thanks for taking the time. [ Mike Clements: ] Matt, great to be here. [ Matt Oldham: ] So instant sellouts, ticket markups, and extra fees, how's this market affecting consumers? [ Mike Clements: ] We found three concerns within the online ticket market space. First, and the one you alluded to start this conversation, is the availability of face value tickets in that primary sale. The second, which you also alluded to, was the level in transparency of fees. For example, we found that across the primary and secondary markets, ticket fees range between 27 percent to 31 percent face value. And finally, some marketing practices, especially within the secondary market spacewhere websites through their appearance would lead the consumers to believe they're buying tickets from the primary seller when in fact they're on a resale site. [ Matt Oldham: ] It sounds like consumers or at a disadvantage in this market. Is there anything being done to address these issues? [ Mike Clements: ] Well consumers do face a number of challenges. When you think about that primary sale, the consumer's competing against ticket brokers, these are organizations that buy and sell tickets for a living. They employ what are known as bots; these are software packages that scour the internet looking for tickets and then when they do become available, will snatch up large numbers very quickly. At that point, the consumer needs to go to the secondary market. Unfortunately there, for popular events, the ticket prices are going to be higher than they are in that primary marketplace. For example, we looked at a sold out rock concert, primary ticket prices between $50 and $100, the resale secondary marketplace between $90 and $790. [ Matt Oldham: ] Is anybody looking at this issue beside federal agencies, I mean are states getting in on the action? [ Mike Clements: ] A few states have price caps that limit the amount of markup. So for example, if you buy a ticket, let's say for $100 you can only mark it up, let's say, 2 percent. A few states have done that; those would be Kentucky, Massachusetts, New Jersey, and a few others. Although ironically some states, in fact, have removed price caps, Connecticut and New York would be examples of that. [ Background Music ] [ Matt Oldham: ] It sounds like there is some concern about the online ticket sales market and that there have been attempts through state and federal legislation to clear up issues of deceptive marketing bots and secondary markets. Mike, should we be hopeful or skeptical that any of these issues will be fixed in the future? [ Mike Clements: ] I think it's a mixed story but, there are important concerns that we've talked about, access to the tickets, the fees, those marketing practices but there have been some positive steps taking place. In 2016, Congress initiated the BOTS Act, Better Online Ticket Sales Act, which effectively limited the use of bots to sort of scoop up large numbers of tickets. There's also this idea of having sort of dynamic pricing where that initial primary sale, the price will vary based upon the demand of the events which again will help limit the amount tickets that a broker can purchase. So there's a few options there that seem to be providing some forward momentum. [ Matt Oldham: ] And finally what do you believe the bottom line of your report is? [ Mike Clements: ] Ultimately, there's a fundamental problem here. For popular events, it's almost always the case that the demand is greater than the supply of available tickets. It's a whether you have an environment where tickets sell in a secondary market for a much higher price or your dynamic pricing where the primary ticket price is higher, that's going to price out some consumers. If you have nontransferable tickets or other means that keep the tickets at a more rate consistent with the primary market, then what you're going to have is other consumers that can't get tickets. So ultimately, consumers, there's going to be consumers, who can't get tickets. Ultimately, when we think about these concerns that we've talked about, access, fees and marketing, Congress will need to decide whether these concerns warrant attention and if so, what form that action should take. [ Matt Oldham: ] Mike Clements is a director in our Financial Markets and Community Investment team and he's the signer of a GAO report on online ticket sales. Thank you for your time, Mike. [ Mike Clements: ] It was my pleasure being here today. [ Background Music ] [ Matt Oldham: ] Thanks for listening to the Watchdog Report. To hear more podcasts, subscribe to us on Apple podcasts. [ Background Music ] [ Matt Oldham: ] For more from the congressional watchdog, the U.S. Government Accountability Office, visit us at gao.gov.