On the back of a lengthy legal battle initiated by the Commerce Commission, global online ticket reseller Viagogo has been held by the High Court to have committed several breaches of the Fair Trading Act 1986. Viagogo has appealed the decision.

The case against Viagogo is a noteworthy instance of a global business being found in violation of New Zealand law, despite only having an online presence here. Viagogo’s several Fair Trading Act breaches included misleading representations about itself, its guarantees and the tickets it sells. In addition to its misrepresentations, Viagogo’s jurisdiction clause in its standard terms was declared to be an unfair contract term.

Background

Viagogo operates an online marketplace where people can buy and sell tickets to live events. It is not an official ticket agent, like iTicket or Ticketmaster, as Viagogo is not directly contracted to sell tickets by the event host. Instead, third parties who have already purchased an event ticket can use Viagogo’s platform to resell their ticket to someone else.

The central plank of the Commission’s case was that Viagogo had engaged in conduct likely to mislead consumers and that it had made false or misleading representations, breaching sections 9, 11, and 13 of the Fair Trading Act. The Commerce Commission brought six actions against Viagogo, all of which succeeded to some degree. 

Viagogo’s problematic representations were:

• it did not clearly disclose its status as a resale platform;
• its ticket guarantees were not accurate;
• it made misleading claims as to the scarcity of tickets by misrepresenting the quantity of tickets available or the level of demand for those tickets;
• it only disclosed booking and delivery fees at the final stages of a ticket purchase; and
• its website implied that Viagogo was an official, authorised ticket agent for certain events despite this being untrue.

The Commerce Commission also successfully obtained a declaration that Viagogo’s standard terms contain an unfair contract term. The term in question required disputes brought by consumers to be governed exclusively by the Courts of Geneva. Notably, the same restriction did not apply to Viagogo. The Court’s declaration as to unfairness means that if Viagogo continues to use the unfair term, or tries to rely on it in the future, it commits a breach of the Fair Trading Act. 

What does the law say?

The Fair Trading Act is one of New Zealand’s key consumer protection statutes. Among other things, it prohibits any person in trade from engaging in misleading or dishonest practices. Whether a representation is misleading depends on the facts of a given situation. In Viagogo’s case, the Court reiterated the following guiding principles that apply to businesses when making “headline” representations:

• What matters is the dominant message, or the “general thrust”, of a representation. Standalone details are not considered in a vacuum. The overall impression is more important. As the famous lawyer Dennis Denuto said in the iconic film, The Castle, “It’s just the vibe of the thing”.
• Any exceptions, limitations or contextualising information must be obvious. It is no good if the explanation is hidden. It must immediately grab attention and contain information strong enough to stop someone from being misled.
• If there is a glaring difference between the headline claim and the rest of the relevant information, the actual position must be set out in the clearest way possible.
• It is misleading to lure consumers into a “marketing web” by giving them a false impression about a product initially, even if they find out the truth before actually buying it.

Representations about Viagogo

Banners

The banner on Viagogo’s website reads “We are the world’s largest secondary marketplace for tickets to live events. Prices are set by sellers and may be below or above face value”. When scrolled down, the banner disappears. 

The positioning of the banner, its lack of prominence and the size of its font mean that it fails to sufficiently inform consumers that the tickets are sold by way of resale.

The content of the banner was also an issue. Those viewing the banner would need to understand what Viagogo means by describing itself as a “secondary marketplace”. 

Nature of Viagogo’s business

Viagogo argued that its website had clues hinting that Viagogo is not an official ticket agent. Visitors can use the website to search tickets for an extensive number of events all over the world (which would not be characteristic of an authorised ticket agent), a button with the words “sell tickets” appears on some pages, and tickets for the same section of an event are listed with different prices (which again, would be unusual for an authorised ticket seller). This, however, was not enough for the Court to consider the level of disclosure sufficient.

The Court also disagreed with Viagogo’s argument that consumers should be expected to have familiarity with other resale websites such as Booking.com or Expedia.com, and that this familiarity should enable consumers to join the dots themselves as to Viagogo’s status as a resale platform. 

Viagogo’s advertising on Google did not help either. The Court found that statements such as “Viagogo Official Site”, “Best Seats” and “100% Guarantee” created an overall impression that Viagogo was an official or authorised ticket seller. Taken literally, these claims would only make sense if Viagogo was the official seller of tickets for an event.

Viagogo’s intention behind its representations did not matter. The dominant message created was likely to lure consumers onto the website by creating a false impression that Viagogo was an official ticket agent.

Considering all circumstances, the Court found that Viagogo misrepresented its status as a resale platform, breaching sections 9 and 11 of the Fair Trading Act.

Representations about guarantees

Until 2019, Viagogo made guaranteed ticket representations which promised that consumers would receive their tickets in time for a particular event, coupled with statements such as “We guarantee that you’ll get valid tickets for the event” and “All Tickets Are 100% Guaranteed”. 

Viagogo also represented, in the Frequently Asked Questions section of its website, that buyers would receive “valid” tickets in time for the event, and that they would be able to “enjoy the event”. Viagogo guaranteed that if a problem were to arise, it would provide replacement ticket or a refund. Under Viagogo’s terms and conditions, however, Viagogo retained the right to decide whether a customer would get a replacement ticket or a refund.

The Court noted that Viagogo’s representations would lead consumers to expect that they were guaranteed entry to an event. Indeed, a consumer denied entry event would not enjoy the event. Viagogo saw this differently, taking the view that that consumers should not care if they are refused at the gate as long as they receive a refund. The Court did not accept this argument.

Representations about tickets

Availability

Viagogo made representations in relation to the scarcity of event tickets available and the level of demand for those tickets, such as: “only a few tickets left”, “likely to sell out soon”, “selling fast”, “about to sell out” and “LAST CHANCE!”.

The qualification for such representations was made available to the consumers via a small ‘i’ icon. This required the consumer to hover over to display the explanation that the representation was based on the tickets available on Viagogo’s website, not the availability of all tickets for that event generally.

The Court found these representations were misleading as the qualifying information was not readily accessible to the consumer.

Prices

Viagogo adopted a pricing strategy called ‘drip pricing’. Drip pricing is where the price initially advertised is gradually increased by adding mandatory or optional fees throughout the purchasing process. This can include charges for delivery, booking, or additional features, leading to a final price that is higher than the initially displayed price.

Viagogo initially displayed only the price set by the ticket seller and mentioned the extra fees in a note section elsewhere on that page. The notes were placed at the bottom of the page, meaning consumers would not see them unless they scrolled down. While the delivery fee added by Viagogo is relatively small, the booking fee is considerable, often increasing the price by around 30%.

If the consumer picked one of the first tickets on the page, they had no need to scroll down. These applicable fees were only visible to the consumer in stages and towards the end of the payment process.

The Court held that by displaying the price as it did and only disclosing the fees late in the process, Viagogo had engaged in misleading conduct. It was irrelevant that the true position was disclosed immediately before the consumer paid.

Unfair contract term

Clause 7.4 of Viagogo’s terms and conditions provided that any dispute regarding Viagogo’s terms was to be governed by Swiss law and resolved exclusively by the Courts of Geneva.

The Court held that requiring consumers to initiate proceedings before the Courts of Geneva gave rise to a substantial imbalance in the parties’ rights and obligations for the following reasons:

• There was a clear lack of symmetry – Viagogo could bring proceedings in Geneva or the consumer’s place of domicile, but the consumer could only do so in Geneva.
• It ruled out the possibility of a customer taking litigative action against Viagogo.
• Without this clause, it would be open to New Zealand consumers to commence proceedings against Viagogo through more accessible domains, such as the Disputes Tribunal.
• There was no reason for Viagogo, an international online business, not to participate, whether by audio visual link or by appointing a representative to attend a hearing on its behalf.

As a small win for Viagogo, the Court did not declare that the part of the term providing that Swiss law is the governing law was unfair.

What should businesses take from all this?

Treat all your communications about your products and services as a whole.

Ensure qualifying information is not just ‘present’, but prominent. If a certain claim needs to be coupled with some form of caveat to prevent it from misleading someone, that caveat should be just as clear as the rest of the claim.

Consider how an average consumer may literally interpret a phrase. Stay away from statements that cannot be substantiated when taken at face value. Even if you expect the consumer to understand that the claim is exaggerated and not meant to be taken literally, the average consumer might not, and that is what matters.

Do not make a promise you do not intend to keep. In most cases, the fine print will not save you.

Be extra careful about your representations on the availability and the prices of your goods and services. Any qualifying information should be obvious and fully disclose the truth. It is irrelevant if you present the full picture at the very end.

Standard terms should be prepared with caution. Consider whether the balance of obligations tips in your favour and whether the inclusion of any questionable terms is reasonably necessary to protect the legitimate interests of your business. Determining whether a term is unfair is a factual exercise. The Court should consider the contract as a whole and take into account all the balancing factors.

We can help you get it right

Get in touch with our experts Hayley Miller, Campbell Featherstone, Güneş Haksever and Ashleigh Ooi.

We can help you:

• Draft or review your consumer contracts and terms of trade.
• Draft or review your business-to-business contracts.
• Review your marketing material and general communications.
• Advise you on your obligations under the Fair Trading Act, the Consumer Guarantees Act 1993 and other consumer protection laws.
• Defend a claim for an alleged breach of consumer laws.
• Provide training on New Zealand advertising and consumer protection laws.

This article was written by Lucy Tustin, a Solicitor, and Güneş Haksever, a Senior Associate, in our corporate and commercial team.