Ticket Scalping and Gift Card Protection

I lead for the Opposition on the Fair Trading Amendment (Ticket Scalping and Gift Cards) Bill 2017. Once again, the House is presented with a bill that seeks to intervene in a market brought to a head by the advent of technologies that have disrupted traditional markets—in this case, buying and reselling tickets to various events for a profit. In economic terms this is referred to as arbitrage or more commonly known as ticket scalping. For decades, ticket scalpers were part and parcel of events. Many of us will recall attending events with scalpers out the front touting admission tickets to willing purchasers. This practice was curtailed by government in the 1980s on the basis of a fair go for consumers. But a secondary market did not disappear. In recent years, the emergence of online activities has presented many more opportunities for scalping or arbitrage that present genuine challenges to consumer rights and the regulatory environment which seeks to protect consumers.

Online arbitrage through platforms such as viagogo have presented circumstances where a huge number of tickets can be purchased by bots and onsold at a later time with a significant mark-up in price. This bill disrupts the market and it is the Government's hope that it will deliver a positive outcome for consumers wishing to purchase tickets to an event.

There are a number of issues affecting consumers' rights and protections in these markets. There are the increased prices, where a ticket bought for $100 is on-sold for hundreds of dollars more; ticket cancellations, where consumers who have bought tickets on the secondary market have found out, even when turning up to the event, that the ticket is no longer valid; and ticket fraud, where a ticket bought on the secondary market is not a valid ticket at all.

As I said, this bill seeks to disrupt aspects of these various activities, with the hope that consumers will have more opportunities to purchase tickets from the primary market sellers—event organisers, sporting venues, concert halls and the like. The Minister has talked up this bill and what it will do and, at this stage, the Opposition will not oppose this bill. However, we note that the bill will not directly address instances of fraud, and presents only an opportunity to disrupt sophisticated online ticket reselling platforms. This bill is no silver bullet, and the maxim "caveat emptor", buyer beware, still applies to the case of purchasing tickets online in the secondary market place.

Before I go on I will outline the intention of the bill. The bill amends the Fair Trading Act 1987 with respect to the supply of tickets to sporting and entertainment events. This part of the bill: one, prohibits the resale of certain tickets to events for a profit; two, prohibits the publication of advertisements for the resale of event tickets for a profit; three, prohibits the use of software to bypass the security measures of a ticketing website in order the purchase tickets; and, four, requires certain event organisers to publicly disclose the number of tickets made available for general public sale for certain events.

The bill amends section 58 of the Fair Trading Act to allow the Minister to switch on parts of the Act for major sporting and entertainment events. New sections 58E and 58F prohibit the resale of tickets bought on the primary market on the secondary market for more than 10 per cent of their original supply cost. That is not inclusive, of course, of booking fees and other fees and charges. Section 58D imposes penalties of up to 1,000 penalty units for corporations and 500 for individuals for breaches of the new laws. The proposed section 58H prohibits the scalper from claiming that the mark-up of the ticket price is for additional offerings, such as hospitality, yet exempts the supply of such packages authorised by the event organiser.

Proposed section 58K tackles the scourge of ticket bots —proh ibit ing c ertain conduct in relation to a ticketing website , which is defined as the use of any software to enable or assist the person to cir cumvent the security measures of the website and to purchase tickets in contravention of the website's terms of use. Section  58 deals with the resale of tickets on various platforms—prohibiting the advertisement of any resale on any platformsuch as newspa per s , magazine s or website s that is more than 110 per cent of the original supply cost, with a  defence for some platform s whose purpose is not directly to facilitate the buying and selling of goods and services, such as Facebook. Proposed Section 58L requires the publication of ticketing information to specified events, where the total number of tickets must be a number that the event organi s er believes on reasonable grounds is not more then 10 per cent greater or less than the total number of tickets that are to be made available to the general public.

This b ill primarily focu ses on regulating the secondary market . T he 2014 inquiry was convinced of the need for a secondary market—in part due to features of th e primary market and the ticket- selling stra tegies used to sell o ut. This has not been addressed in the bill. Just this week tickets for t he Pink concert went on sale. A number of members in this place and people in my electorate and beyond have raised with me the fact that when they went to the web site to purchase tickets for Pink they found out that that particular online service was in meltdown and that only packages were available.

They were available at $500, twice the original sale price of $250. It is unfortunate that that style of selling from the primary venue will be exempt in this legislation yet it appears that people are paying twice the price but certainly not getting twice the value. We on this side of the House will keep a watching brief on that because if it is the case, we want to protect all consumers.

There are some transparency measures in this bill that affect the primary market, such as d ivision  4 which deals with public disclosure of ticketing i nformation— where the total number of tickets to be sold for public salemust be notified by the organis er , plus or minus 10  per cent— although there are concerns primary market sellers can still operate with a degree of opaqu eness such as I have just described . The Opposition still believes that opaqueness in the primary market is a cause for concern in relation to consumer rights and protections. T he Opposition supports greater transparency in all markets, and will keep a wat ching brief on how practices in the primary market impact consumers.

As a related matter, there is no recognition of efforts in the secondary market to improve standards through codes of conduct and the l ike. Whilst operations like v ia gogo are the obvious focus of the bill, there are other operators that have sought to develop codes of practices and ethical business standards to provide greater consumer protection. We note the codes of ethics developed by the Ticket Brokers Association as well as the consum er protections advanced by organisations such as Ticket H ub, where money is not exchanged until an event is attended by the secondary purchaser. Yet, at the end of the day the practice of ticket reselling operates in a grey area of legislation, and there is nothing in the bill which either outlaws or effectively legitim is es the practice. The Opposition would appreciate the advice of the Minister as to whether the Government would consider stronger regulations of the secondary market as a way of promoting gre ater transparency across the primary and secondary market s .

We are concerned that the central response is a cap, which was not recommended by the upper House inquiry in 2014 and whose longer term impact is unknown. In fact, it is quite odd that the right- w ing members of the Liberal Party are supporting a bill that places price caps on a market where they would not consider caps in other areas like housing, power or other life necessities. This presents an intriguing state of play in this Parliament. Surely those members would hold the allocative efficiency of the market almost as an article of faith.

T he Opposition is still significantly concerned with the practice of cancelling tickets by event organisers and believes much more needs to be done in this area . The Opposition is concerned that a c entral focus of consumer complaint, namely fraud and ticket cancellation, is not adequately addressed by this bill . Whilst resellingheavily marked - up tickets is of concern, this is also long - established market dynamics. If I were to look for an international flight to London for tomorrow I would expect to pay a higher price than if I had, for instance, bought it weeks ago.

The question is about the supply being illegally purchased through an online bot before I had a chance to purchase a ticket. I would contend that a massive fan buying a ticket for $500 is a reflection of demand. The critical issue is that once a ticket has been purchased for an inflated price it is genuine and not going to be cancelled. This i s perhaps the more critical issue at play here, and goes back to the need for transparency and certainty in the two markets that operate in this platform. The Opposition believes that this bill does not address these aspects, and cautions the event - going p ublic to exercise ongoing caution when buying tickets on line.

Furthermore, industry stakeholders are concerned also that this bill raises more questions. I seek clarification regarding two questions that have been raised. Will the secondary resaler always know what the original price of the ticket is in order to ensure that they are complying with the regulation? The provision requires transparency and noting the row number, seat number and price on the resaleable ticket, but has the Government considered that that may provide further assistance to those who fraudulently duplicate tickets?

Given that this is the second time a bill of this nature has been brought before the House, the Opposition is concerned that it still does not quite get the balance right. However, given the urgent need to attempt to disrupt the business of ticket bots, we will not oppose it. Many in the industry have sought a further inquiry on top of the 2014 inquiry. I note that Government members wrote a dissenting report to that inquiry's recommendations. It seems the Government is hell-bent on implementing its only regulatory solution to this matter, come what may. Whether or not this legislation disrupts the business model of the likes of viagogo remains to be seen. The Opposition is concerned that the use of caps in the secondary market may have unintended consequences. We are concerned there is less regulatory intervention in the primary market—all of which means fewer rights and less information for the consumer. Despite that, the Opposition will not oppose the Government in its attempts to ameliorate some of the negative impacts from online ticket scalping.

During the committee stage we called for a statutory review of this legislation within the first three years. I am disappointed to say that the Government did not accept those amendments, despite the Government having acknowledged that it is aware of how fast this business model is spreading and how it keeps pace with any form of prosecution. Therefore it would be fitting for the legislation to be reviewed much sooner than the five-year statutory review in the current form of the bill. I am very disappointed that the Government has not joined Labor to ensure that consumers are protected by reviewing the legislation in a more timely fashion. The advances of technology, and the instinct for profit are powerful forces that should make us to keep a close eye on this aspect of the bill to ensure the consumer is getting the best deal.

I now turn to the reforms proposed for the sale and longevity of gift cards. The Opposition welcomes the reforms and believes there are no issues of concern. I am sure the Minister for Innovation and Better Regulation was pleased to hear that.

Lengthening the expiry date of gift cards to three years makes absolute sense and is positive for the consuming public. Retailers make their money when the gift card is originally purchased, so to lengthen the term of validity to three years simply requires some accounting measures—something that retailers should do immediately. The Opposition notes that the reforms do not apply to cards supplied in exchange for goods, a prepaid card or voucher redeemable for phone credit, internet access or the like, a debit card, a credit card, a prepaid travel card supplied by a financial institution, or a card or voucher supplied as part of a customer loyalty program. The Opposition strongly supports this aspect of the bill and wants to see it implemented as quickly as possible. In this day and age, such reforms can be implemented by businesses quite seamlessly, regardless of what they tell us. To effect that, the Opposition in the other place moved an amendment to provide that this initiative be implemented from 1 December this year—in time for the upcoming Christmas season.

It would be wonderful if the Government agreed to that amendment. I know the Minister would like it to happen. The consumers of New South Wales would see that we support them. We want to make sure that any gift cards received this Christmas come under this legislation and are valid for at least three years. I call on the Minister to join with us on this side of the House and—in good spirit for consumers in this State—ensure that this initiative is introduced 1 December.

In conclusion, the Opposition strongly supports many aspects of the bill, particularly efforts to smash the business of ticket bots and the gift card reforms, but we have genuine concerns about certain elements regarding ticket resale. While we will not be opposing the bill, we will be maintaining a watching brief. Interfering with a complex market such as ticket resale, which involves not one but two markets—primary and secondary markets—may result in situations neither anticipated nor welcomed for consumer rights. I hope the Government will see the error of its way and support the Opposition's amendments in the consideration in detail stage. I commend the bill to the House.