On 2 October 2020, the Federal Court of Australia ordered viagogo AG ("viagogo"), a Swiss-based company, to pay a pecuniary penalty of AUD 7 million for making false or misleading representations when reselling event tickets, in contravention of the Australian Consumer Law ("ACL").
The Court found that viagogo made a number of misrepresentations in contravention of the ACL:
- viagogo marketing itself as an "official" seller when it was in fact a platform for second-hand sales;
- viagogo representing that tickets were selling fast or that quantities were limited, without adequately disclosing that this referred only to quantities available on its website, not to the event itself; and
- viagogo advertising low prices to draw in consumers when the true price included additional fees, and not prominently specifying the total fee payable alongside the low price.
The Court also ordered an injunction, restraining viagogo for five years from making similar representations, and that viagogo implement and maintain an ACL compliance program.
| what you need to know - key takeaways when conducting business in australia |
- Companies must ensure that the use of the term "official" does not misrepresent an affiliation, endorsement or relationship with another party that is not accurate.
- Representations as to the price of products and services should refer to the total price for which the product or service can be purchased by consumers, including applicable fees, to avoid falsely inducing customers to believe that a lower price may be available when that is not the case.
- Beware of using pop-ups, banners, and notifications during the purchasing process which are designed to create, or might otherwise have the effect of creating, a sense of urgency. Even if these messages are not in themselves misleading, they lessen the likelihood of an ordinary consumer paying attention to the 'fine print' during the purchasing process.
- Companies not based in Australia, but conducting business over the internet with Australian consumers, are nevertheless subject to the Australian Consumer Law and the significant penalties available for breaching those laws.
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Official Site Representation
Viagogo's use of the phrase "Buy Now, viagogo Official Site" was found to be misleading because an ordinary consumer would understand this phrase to mean that official original event tickets could be purchased from viagogo, or that viagogo was affiliated with the event host, when the tickets available were actually being resold.
The Court characterised this as a "very serious" misrepresentation as it "fundamentally misled consumers as to the nature of viagogo's business". A penalty of AUD 2.5 million was imposed for this conduct.
Quantity representation
viagogo's website repeatedly displayed statements such as "Only five tickets remaining!", "Tickets are likely to sell out soon" and "Last chance!". The Court found that an ordinary consumer would understand this as referring to the scarcity of tickets available for the event overall, when such representations were actually referring to the tickets being sold only on viagogo.
The Court considered that the effect of this conduct was to distract consumers from the inadequate disclaimers on viagogo's website and hurry customers along. The Court described the misrepresentations as being on "an industrial scale", noting that they would not have escaped the attention of any consumers due to the frequency and the manner in which they appeared. A penalty of AUD 2.5 million was imposed for this conduct.
Total Price representation
The Court found that viagogo had misrepresented that consumers could purchase a ticket for a stated price when in fact additional fees needed to be paid to viagogo.
By making the misrepresentation at the start of the purchasing process, the Court considered that viagogo "seduced" customers with a misleading impression. The Court acknowledged that the customer eventually learned the true price on the final page but by then, the customer had invested significant time navigating the booking process. A penalty of AUD 1.5 million was imposed for this conduct.
Part Price representation
The Court found that viagogo made a part-price representation in contravention of the ACL by stating on its 'Delivery Page' a price for tickets that excluded further fees payable, without also prominently specifying as a single figure, the price for each ticket that included the additional fees.
The Court noted that consumers were drawn further into the transaction as a result. However, the ACCC's case was based on only three transactions and the conduct was of a limited duration. A penalty of AUD 500,000 was imposed for this conduct.
With thanks to Andrew McClenahan and Karen Zhong of Ashurst for their contributions.
