02/01/2018

"Everyone Does It” Doesn’t Fly at NAD

This reasoning doesn't always go over so well

When a widespread industry practice comes under regulatory scrutiny, companies that end up in the crosshairs sometimes fall back on the “everyone does it” defense. This argument has an intuitive appeal in the consumer-protection context—consumers are presumably aware of practices that are common across an entire industry, the thinking goes, and they make purchasing decisions with knowledge of these practices.

The online ticket reseller StubHub recently tried this approach at NAD. It didn’t go over so well.

NAD launched an inquiry into StubHub’s fee-disclosure practices to determine whether consumers were being misled about the total cost of tickets sold on the site because StubHub does not disclose the service fees when it initially displays the ticket price. StubHub discloses the fees, which can range from 24 percent to 29 percent of the ticket cost, only at the time of checkout, after the consumer has already made the decision to buy the tickets. NAD was concerned that consumers do their comparative shopping when they see the initial price display—not at the time of checkout, when the true cost of the ticket is revealed—and, thus, are misled into believing that the StubHub tickets are cheaper than they are.

Please select this link to read the complete article from Venable LLP.