District of Columbia Attorney General Brian L. Schwab announced that he filed a lawsuit against StubHub, in which he alleges that the online ticket platform used dark patterns to mislead consumers about ticket prices in order to charge them "junk fees."
In announcing the lawsuit, Schwab explained, "StubHub lures consumers in by advertising a deceptively low price, forces them through a burdensome purchase process, and then finally reveals a total on the checkout page that is vastly higher than the originally advertised price."
"Junk fees" – and the broader practice of engaging in so-called "dark patterns" in order to trick consumers into taking actions they would not ordinarily take – are getting a lot of attention right now in the United States. Even though this particular lawsuit is still just at its beginning stages, there are some important things for advertisers to pay attention to here.
First, the District of Columbia isn't basing its lawsuit on a new "junk fees" law that was passed or a recent rule that was promulgated, like we're seeing in other jurisdictions. Instead, the Attorney General's lawsuit is based on D.C.'s general consumer protection law, which prohibits, among other things, misrepresenting "a material fact which has a tendency to mislead," failing "to state a material fact if such failure tends to mislead," using "innuendo or ambiguity as to a material fact, which has a tendency to mislead," and advertising products "without the intent to sell them as advertised or offered." If you're waiting for a particular "junk fee" law or rule to take effect before you address your own drip pricing issues, don't assume you're still in safe territory. Even without a specific rule addressing junk fees, as this case shows, a regulator or plaintiff may still take the position that these types of practices are already prohibited by applicable law.
Second, it's important to understand the specific harm that the Attorney General is alleging here. This case is not really about consumers being charged for fees that they didn't agree to pay. Rather, it's about the consumer experience during the online purchase process and the alleged harm that is inflicted if they don't understand the total price of the product they are buying until they go through a complicated sales process and ultimately get to their shopping cart. In the lawsuit, the Attorney General alleges that, instead of disclosing the total price up front that consumers must pay, Stub creates a complicated order flow that causes consumers to invest (needless) time and effort into the purchase process before they learn what the price really is. So, A.G. alleges, for example:
- When consumers select the tickets they want to buy, StubHub advertises a "deceptively low price" that doesn't include the mandatory fees that consumers must pay and that doesn't even indicate that additional fees will be added;
- As consumers work their way through the purchase process, StubHub starts a ten-minute countdown clock, which "pressures consumers to complete the purchase and minimizes the time they have to make informed decisions";
- StubHub requires consumers to navigate through unnecessary web pages, causing the countdown clock to run down further "increasing the pressure toward a purchase";
- StubHub also gives users the impression that tickets are scarce by including the number of people who have viewed the event in the last hour, by stating that tickets to the event are selling fast, and by indicating that the tickets the consumer is considering are the last ones available in that section;
- Consumers are also required to input their personal information before the full ticket price is disclosed to them; and
- Finally, "as the clock ticks down," StubHub discloses the full price of each ticket, which includes substantial "Fulfillment and Service Fees" – which could increase the advertised price by up to 40%.
The Attorney General characterizes this as a bait-and-switch, alleging that StubHub promotes the tickets for one price in order to draw consumers in, but then ultimately charges them what is often a much higher price. But it's not just about the alleged bait-and-switch; it's about what consumers have to endure before they learn the full price. In many ways, the key harm that is being alleged here is that StubHub causes consumers to invest so much time and effort into getting the tickets that, by the time they learn the true price, they're manipulated into paying more than they planned to. In other words, the burdensome online purchase process – that causes consumers to expend time and effort (under pressure) – is, in and of itself, a serious harm.
The A.G. also alleges that calling those additional fees "Fulfillment and Service Fees" is misleading as well, since "it misrepresents the nature and purpose of those fees, while failing to adequately explain to consumers how they are calculated and what they are used for." The A.G. asserts that although StubHub claims that these fees "help us bring you a safe, global marketplace where you can get tickets to your favorite events," the truth is that the fees vary based on factors such as ticket price and supply and demand, which have nothing to do with issues such as fulfilment and service. And, noting that these fees can vary wildly – from a few dollars to 40% of the purchase price – the A.G. says that there's no way for consumers to figure out what those fees will be, or what they cover, until they make their way through the burdensome purchase flow. What's significant about these allegations is that the Attorney General is suggesting that it's not enough that consumers know the total price that they are paying. Instead, if you're adding on fees, consumers have the right to know what those fees are really for and how they are calculated.
The Attorney General asserts that these alleged practices by StubHub aren't merely deceptive or unfair practices, but they are "dark patterns." The A.G. argues that the specific problematic techniques that StubHub uses include:
- Scarcity - Creating purchase pressure by creating a false sense of high demand;
- Urgency - Creating a false sense of urgency by using a countdown clock;
- Obstruction - Preventing consumers from comparing prices by not disclosing the total price until the final stage of the transaction;
- Information hiding - Hiding the true price of the tickets until consumers have invested significant time in the purchase process;
- Interface interference - Using style and design to distract and misdirect consumer attention from both the lack of disclosures and from the disclosures that are given;
- Coerced action - Forcing consumers to provide personal information before learning the total price of the tickets; and
- Asymmetric choice - Preselecting the option that shows the ticket price without the additional fees.
As the A.G. explains, "Studies confirm that utilizing these dark patterns, including 'drip pricing,' serves an effective – yet deceptive – psychological function."
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