The ‘processing fee’ money grab

It’s a typical result of a big class action settlement. By the time the damaged parties get compensated, there’s not much money left.

Ticketmaster announced today it’s giving $1.50 refunds to people who ordered tickets from the service between Oct. 21, 1999 and Oct. 19, 2011.

Business Insider reports the settlement of a class action suit comes because Ticketmaster did not tell anyone that they make a profit off “processing fees.” In other words, it wasn’t really a “fee,” it was just a money grab.

The settlement doesn’t ban Ticketmaster from doing this in the future, it just has to say on its website that it’s doing it. People will also get an additional $5 if they used “expedited delivery” because Ticketmaster was apparently adding a profit margin to the actual cost of UPS delivery, too.

Coincidentally, tickets for next March’s Buddy Guy concert in Minneapolis went on sale this afternoon. Here’s the breakdown of what people are forced to pay on a typical Ticketmaster order:

Ticket price: $54.50

Facility charge: $4.00

Convenience charge: $12.55

Taxes: $1.36

Order processing fee: $7.21

So what good did the lawsuit against Ticketmaster do? This line in the story answers the question:

Also, the Counsel attorneys plan to ask for an award of up to $16,500,000 in attorneys’ fees and expenses, as well as $20,000 to the two plaintiffs who brought forward the class action in the first place.

You could buy all the seats for the next 113 Buddy Guy concerts at the State Theater with that kind of money.

  • davidz

    Ticketmaster is one of the reasons why I don’t do much in the way of live music anymore. I used to see shows all the time, but it irks me to no end to spend 30-40% of my end-price as fees to Ticketmaster.

    A few dollars can readily be compared favorably against driving downtown and picking up tickets at the box office window. When it’s a wash, I just end up deciding the whole thing isn’t worth it, and then I just do something else instead.

  • BenCh

    From a website on the lawsuit:

    “For each transaction (up to a maximum of 17 transactions) that you made during the Class Period, you will receive one code, via email, for a $1.50 discount off future transactions.”

    Or in other words, Ticketmaster will give you a slight discount on your next purchase with Ticketmaster because Ticketmaster took too much of your money.

  • Jim!!!

    Box offices and record stores are a nice option. Get tickets for First Avenue and other venues at The Depot and you get a $1 coupon for food and no fees. In fact, I might just do that tonight so I can see Dr. Dog.

  • Paul

    I got an email regarding the settlement on 11/28. As usual, the only value in the ‘class action’ is for the ATTORNEYS, who pocket the lion’s share of the outcome.

    When will the courts being to understand that a “discount on future transactions” only puts MORE money in the abusers pockets? Darn little deterrent effect for them….

    I was looking at tickets for Roger Water’s “The Wall”, and the fees from TicketMaster were equally outrageous…at least $50 extra for a two-ticket purchase, potentially adding 25% more cost for ‘cheap seats’.

    Thankfully I work in St. Paul and can pick up Ordway and River Center event tickets at the box office!

  • Paul

    I read through the summary Notice of Proposed Settlement and found this interesting:

    “Lead Class Counsel will file…an application for an award of up to $15 million in attorney’s fees…which would represent a ‘multiplier’ of approximately 2.5 times {Counsel’s} ‘lodestar’ [actual fees] … of approximately $6.5 million.”

    Neat, a built-in 2.5x profit on their regular fees. Sounds pretty similar to what Ticketmaster did…

  • John P II

    Ticketmaster will “pay out” a minimum of $45 million dollars over the 4 year period, so the attorney fees are roughly a third. That’s pretty standard for a large class-action lawsuit settlement.

    Look at the recent class action settlement of the METO case also discussed on news cut (improper restraint of clients in state facility in Cambridge) – settled for approx $3 million with attorneys requesting $1 million fee (and the loser there was the State of MN.) Same outrage?

    And because a previous commenter mentioned First Avenue, remember they recently dropped Ticketmaster and use a different ticketing service. AEG (Live Nation’s major rival) is also developing their own ticketing system, aided by the DOJ’s conditions for approving the Live Nation and Ticketmaster merger.

    Not a huge fan of Ticketmaster, but when thousands of reserved seats sell out in minutes or tens of thousands of festival tickets sell out in hours, I do appreciate the efficiency.

  • John

    With Ticket Master fees approaching 50% of most ticket prices, I have pretty much completely stopped going to any venue that uses TM as their ticket processor.

    Live events are expensive in general. Putting that much “hidden” cost into the ticket is part of why I don’t go out much any more.

    By the way, how many people will accept that kind of false advertising outside of the ticket industry? I certainly wouldn’t take a loaf of bread home that was marked at $3.00 on the shelf, but cost $425 at the checkout because of “grocery store bagging fees, convenience fees, and fresh delivery fees” I’d leave the bread on the counter and go somewhere else.