Viagogo faces High Court, accused of 'extensive fraudulent behaviour'

Newstalk ZB, NZ Herald,
Publish Date
Tuesday, 5 February 2019, 4:27p.m.
Tickets re-sold to a Bruno Mars concert is one of those under scrutiny. (Photo / NZ Herald)

Viagogo fought its corner at a High Court hearing brought by the Commerce Commission today - but the outcome hangs in the balance with Justice Patricia Courtney reserving her decision.

The ComCom had not expected the controversial online ticket seller to be represented in court at the hearing, which began this morning on the regulator receiving around 600 complaints about allegedly over-priced or invalid tickets.

However, it learned at the last minute that Viagogo would be represented by MinterEllisonRuddWatts partner Aaron Lloyd on a "Pickwick basis" (that is, with no written submissions prepared).

Lloyd told the court that it was "easy for the Commission to put the boot into my client" with what he called "hyperbole" when Viagogo had in fact been a successful business for 10 years - and that it could not have been successful for that period if its service was based on misrepresentation.

He argued that Viagogo should be served in its home country of Switzerland.

Viagogo had no place of business in NZ, he said, and its website was based offshore.

The commission has argued that serving in Switzerland would take at least six months.

Lloyd said his appearance did not mean Viagogo accepted local jurisdiction. He indicated a protest would be filed on that basis.

He said all fees and costs were properly disclosed.

Addressing the commission's claims about misrepresentation of ticket scarcity, Lloyd said Viagogo was a reseller "so of course it doesn't have all the tickets to an event available. So it flows from that that when Viagogo says, for example, only 10 tickets are available to an event, that means only 10 tickets via Viagogo."

He added, "Look, maybe that's not clear enough, but that's a matter of degree, not a breach [of the Fair Trading Act]," he said.

"It's difficult not to form the view that consumers have been mislead, on the evidence that I've got," Justice Patricia Courtney said at one point as Lloyd made an argument that no guarantee could be absolute.

Lloyd made an analogy to toasters, which he said sometimes broke down.

He added that someone re-selling a ticket over the Viagogo platform only got their money once a buyer had successfully gained entry to an event.

Lloyd indicated that policy was the result of a recent change, along with other changes that he said addressed problems raised by the commission.

When pressed for more details, he said the fact he was appearing on a Pickwick basis limited the amount of detail he could go into at this point.

Meredith Connell's Nick Flanagan said Viagogo was guilty of "extensive fraudulent behaviour - and the evidence is that it continues to the present time." Complaints continued to come in up to a few days ago when the regulator finalised its affidavits, he said, adding they were "of the same nature they have always been."

Earlier, lawyers for Meredith Connell, acting for the Commission, told the court that broke the law by offering customers tickets to the 2017 Irish and British Lions tour of New Zealand.

While second-hand sales or "scalping" of tickets is not ordinarily illegal, the Major Events Management Act (2007) rules out the practice in specific cases, including Lions tours, the commission said through Crown lawyers Meredith Connell.

The regulator submitted an email from Viagogo to customers as evidence.

The commission is seeking an interim injunction against the Swiss-based Viagogo, which it alleges has made false claims about the number of tickets left for various events; frequently allowed the same ticket to be resold multiple times; gave the impression it is an official ticket for events when it is not - and made false representations about a money-back guarantee. The regulator alleges that at least 79 Kiwis have been sent invalid tickets.

It also alleges that undisclosed fees increase the price of a ticket by a third, and says that Viagogo's dispute-resolution process, which requires a customer to work through a Swiss court, is unreasonable.

Meredith Connell's Nick Flanagan told the court that as a second-hand ticket seller, Viagogo had no access to information about the number left for an event. He said Viagogo used "pressure sales tactics" that included inconsistent accounts of the number of tickets left for an event, and a barrage of messages about other buyers waiting in the wings.

He also argued that Viagogo could not fulfill its guarantee to supply valid tickets, because once a customer arrived at an event and discovered their ticket had been sold twice, the event could be sold out. It noted that Viagogo left refunds to its discretion if a replacement ticket could not be supplied.

He also that in one case where Viagogo customers from Christchurch arrived at a Bruno Mars concert in Auckland to find their tickets had already been scanned, the Swiss ticket seller did phone and offer to buy general admission tickets - however, they were what it called the "inferior" standing area, meaning a child with the party would not have been able to see the concert.

Flanagan noted that Viagogo had made changes to its UK website following orders won by the Competition Markets Authority in November last year (separately, the CMA has complained that it has "serious concerns" Viagogo is not following another part of the orders - to submit to an independent review of instances were its ticket guarantee was not followed through)

Justice Courtney asked lawyers for both sides to supply memoranda with more information, and did not give a time frame for ruling on the ComCom's request for an interim injunction.

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