Earlier this month, President Obama approved two pieces of consumer protection legislation aimed at curbing the use of automatic programs to purchase tickets through online sellers and limiting the ability of companies to use contacts to prevent customers from posting online product reviews. Both bills passed through Congress with bipartisan support, as we reported in September.
The Better Online Ticket Sales Act of 2016, otherwise known as the BOTS Act, makes it illegal "to circumvent a security measure, access control system, or other technological control or measure on an Internet website or online service that is used by the ticket issuer to enforce posted event ticket purchasing limits or to maintain the integrity of posted online ticket purchasing order rules." The BOTS Act also criminalizes the selling of tickets if the seller "participated in . . . had the ability to control . . . knew or should have known" that the tickets were acquired through the use of automated "bot" programs. Although the BOTS Act will be enforced by the Federal Trade Commission ("FTC"), the law grants states the right to bring civil actions against alleged violators. The BOTS Act builds upon the efforts of numerous states to ban the use of automated bots in response to public outcry from consumers, performers, and online ticket sellers – including a scathing New York Times op-ed by Hamilton creator Lin-Manuel Miranda – that third party ticket sellers have been using bots to quickly scoop up the most desirable tickets to performance and sporting events, only to resell those tickets on secondary markets for a substantial profit.
In a similar vein, the Consumer Review Fairness Act of 2016 seeks to protect consumers by voiding provisions in "form contracts" that prohibit or penalize the purchaser for reviewing or evaluating "goods, services, or conduct" of sellers. The law also prohibits terms that transfer or require the purchaser to transfer intellectual property rights in the review to the seller. Notably, the law does not impact the ability of a seller to pursue defamation claims against the reviewer and exempts provisions aimed at protecting trade secrets and other sensitive seller information.
Takeaway: Coming off a contentious election season that highlighted the differences of our two major political parties, Republicans and Democrats managed to come together and find common ground to reinforce consumer protections in the digital space. Online ticket retailers can continue to earn consumer trust by working with the FTC to combat the prevalence of bots, while sellers of consumer products can similarly build consumer confidence by responsibly addressing customer reviews without unlawfully limiting consumer speech.
This article is presented for informational purposes only and is not intended to constitute legal advice.
