Viagogo and iSelect – two recent wins for consumers
Posted on October 16, 2020
Two unconnected cases show that big businesses who try to take advantage of consumers can get punished if their conduct is misleading or deceptive.
If you’re a Port Adelaide supporter who missed out on Preliminary Final tickets with Richmond, you could have bought them for $592per ticket through Viagogo – but you might want to be a little careful before you do.
Last year, we wrote about Viagogo being found liable by the Federal Court in Sydney for misleading and deceptive conduct engaged in through its website (click here to read the article). Now, the Court has fixed its financial penalty against Viagogo - A$7 million.
The ACCC (Australian Competition and Consumer Commission) took Viagogo to task in 2017 about the way their website operated. Federal Court Judge Stephen Burley described one category of misleading representations as being made ‘on an industrial scale’.
In general, the Viagogo website tried to generate FOMO (fear of missing out) among (often young) consumers if they did not rush to buy the tickets. Viagogo misled by suggesting that it was the (or a) ‘official’ seller of tickets for particular events. It is and has always been only a reseller, indeed ‘the world’s largest secondary marketplace for tickets to live events’, as their website now describes itself.
Viagogo also sought to represent that certain tickets were scarce (- they weren’t); and provided customers with ‘drip pricing’, ie in the booking process the total cost of buying tickets (including a 27% booking fee, etc) was not disclosed until on or near the final screen.
It was ‘unimpressive’ that despite their very large and substantial online Australian presence, Viagogo refused to accept service of Court action through its Australian lawyers, making the ACCC go through the convoluted service process in the Hague Convention.
The Court said that there was a need for general and specific deterrence. In arriving at the A$7 million fine, it found that even following the liability judgment last year, Viagogo had done too little too late to put its house in order, or fix up the problems identified with its website and the claims made through it. Viagogo had taken no real positive steps to get legal training and advice on ‘doing it right’ under the Australian Consumer Law.
Whilst A$7 million is a hefty chunk of cash, it has to be kept in context. Founder and CEO of Viagogo (Eric Baker) started Viagogo in 2006. He had co-founded a company called StubHub in 2000, from which he was kicked out by his co-founder. In late 2019, Viagogo made a bid to reacquire StubHub and bring it into the Viagogo fold. The price? - Reportedly US$4 billion, or around 1000x the A$7 million penalty in this case.
The UK regulator has regularly slammed Viagogo, which has been investigated or had action taken against it in Italy, Spain, Germany, France and Switzerland. There is considerable anxiety online about Viagogo increasing its reach and power still further (although the COVID-19 pandemic has had a disastrous effect on live events and Viagogo's revenue).
In an unrelated case, Australian company iSelect was fined $8.5M this month for making false or misleading representations in its electricity comparison service.
iSelect is a free (to consumers) online service. It compares prices and terms for utilities, insurance and finance products, supposedly so as to enable consumers to get the best deal. iSelect makes its money through fees and commissions paid by the energy retailers when a consumer signs up for an energy plan through iSelect.
A well known observation about obtaining services through the internet comes to mind: ‘If you’re not paying for it, you are the product.’
iSelect had apparently not been straight with consumers in telling them that it was not comparing all available plans; nor indeed all plans offered by its partner retailers. In particular, cheaper plans were available only via iSelect’s call centre, not through its online comparison service.
Over the last two years, iSelect provided over 4 million energy price comparisons in five states and territories in Australia, and it simply got wrong the price of some plans which it had recommended to almost 5,000 consumers, resulting in some cases in plans up to $140 per quarter more expensive.
The ACCC had said that iSelect needed to make it very clear if recommendations were influenced or limited by commercial relationships, and had to implement steps to prevent incorrect recommendations.
iSelect had admitted liability and cooperated with the ACCC in a joint approach to the Federal Court, which fixed the $8.5 million penalty. Again, whilst the fine is sizeable, it is still only 11.4% of the company’s market capitalisation, or 7% of its annual revenue.
Nevertheless, an interesting start to October for those trying to redress the rights of consumers against businesses who may take advantage of the power imbalance between big business and the consumers.
We regularly advise businesses on how to do it right and keep on the right side of the law in dealings with consumers or other businesses. Please talk to us if you would like help in this or other commercial areas.
 as of 14 October 2020