7:49am PT by Eriq Gardner
StubHub Faces Lawsuit for Changing Refund Policy in Wake of COVID-19
Many events this past month were canceled. Others were postponed. Providing refunds obviously makes sense, but what happens for those tickets resold in a secondary market? Who should shoulder those cancellation costs? Thanks to the nightmare known as the COVID-19 pandemic, StubHub faces a rather existential problem.
In Wisconsin federal court, StubHub has been hit with a putative class action from the buyers of those resold tickets. According to the complaint, StubHub has walked away from its longstanding "FanProtect" guarantee of cash refunds upon event cancellation.
The suit explains how StubHub has changed its refund policy as the novel coronavirus wreaked havoc on the live event business. On Feb. 26, StubHub's general counsel was hailing the company's "FanProtect" program to Congress as "the hallmark of our business and it is why we have earned the trust of fans around the globe." By March 12, StubHub was nudging consumers toward a coupon valued at 120 percent of the original purchase even while acknowledging, "Our policy is to provide a full refund with fees if an event is canceled." But by March 25, refunds were only provided to buyers "where required by law" as the 120 percent coupon became the default policy.
In a March 30 message to the ticket buying community, StubHub president Sukhinder Singh Cassidy explained the policy change.
"We’ve worked hard to create a platform that serves both buyers and sellers as a trusted marketplace," he wrote. "As a convenience to buyers, acting as an intermediary, we’ve historically made the decision to refund them for canceled events before collecting money from the sellers. We’ve also historically offered sellers more convenience by paying them for ticket sales on our platform before events actually happen. Under normal circumstances, these processes are manageable. Given the impact of the coronavirus, it is not possible to sustain this practice in the near-term. We are facing significant timing delays in recouping funds from the thousands of sellers on our platform, and expect these challenges to continue in the coming months. At the same time, buyers expect immediate refunds. As a result, we’ve enacted new policies in the US and Canada that we believe are clear and fan-first."
The new lawsuit claims the policy change amounts to a breach of the StubHub user agreement, conversion, negligent misrepresentation, a violation of California's consumer protection law, unfair business practices and false advertising.
The plaintiffs, represented by the firm of Liddle & Dubin, point to eBay’s $4 billion sale of StubHub to Swiss competitor Viagogo last November to knock any notion of a cash flow crisis. As the complaint states, "Despite having recently been acquired for over 4 billion dollars, instead of obtaining liquidity to weather the storm, Defendants sought to simply pass its losses on to its clients."
A StubHub spokesperson says, "We will not comment further while the case is pending."