Nationwide Ticket-Bot Ban Signed Into Law
On December 14, 2016, President Obama signed into law the Better Online Ticket Sales Act of 2016. Is the BOTS Act just the first of many such crackdowns on automated illegal internet practices?
In short, the BOTS Act has two distinct purposes.
First, it prohibits the circumvention of a website’s (e.g., online ticket seller) security measures to acquire event tickets. It is unlawful under the BOTS Act, “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.”
Any “person” that “circumvents” a “security measure” is in violation. “Circumvention” and otherwise violating the BOTS Act does not objectively appear to require the use of a bot, although use of a bot is certainly within the purview of the legislation. Interestingly, there is no provision in the BOTS Act that prohibits the use of a bot, as long as the bot adheres to the ticket purchasing order rules.
The BOTS Act is violated if there is a single circumvention of a stated ticket purchasing rule.
Theoretically, if a particular ticket purchasing rule is couched in terms of “maximum tickets per purchase,” a bot could be programed to make multiple purchases of that maximum and might not be deemed to have violated the BOTS Act.
Second, the Bots Act restricts the reselling of tickets when the seller knows or should have known that the tickets were acquired via circumvention of such security measures. It is unlawful the BOTS Act, “to sell or offer to sell any event ticket in interstate commerce obtained in violation of” the prohibition on circumvention.
The policy behind the BOTS Act is not limited merely to making unlawful the practice of ticket resellers utilizing programs and scripts to purchase as many tickets as possible at lower rates, and then, in turn, selling them at inflated prices. It goes a bit further by making the resale of tickets obtained in such a manner unlawful as long as the person/company selling possesses either actual or constructive knowledge regarding how the ticket were obtained (e.g., using illegal bots), or if the person/company participated in the acquisition of the tickets.
Additionally, the “security measure” need not be particularly strong for liability to attach. For example, a ticket vendor could theoretically require that a purchaser certify that it will not resell the tickets at a price above the purchase price. If the purchaser assented to such terms it could be held to be in violation of the BOTS Act.
While the BOTS Act appears to be geared toward those that actually use such technology or broker tickets, query whether the legislation and its “circumvention” prohibitions apply to a programmer or platform/technology provider that is not involved in the purchase/sale process.
By way of analogy, platform/technology provider liability for the conduct of end-users has recently been considered in the context of the Telephone Consumer Protection Act. In short, the TCPA restricts the making of telemarketing calls and the use of automatic telephone dialing systems and artificial or prerecorded voice messages.
The FCC has previously stated that a calling or texting platform provider may face primary liability under the TCPA as the “caller” based on a case-by-case analysis of whether the entity takes the steps necessary to physically place the telephone call, or is so involved in the placing of a call to have been deemed to initiate it (as opposed to merely having some role, however minor, in the causal chain that results in the making of the telephone call).
The FCC has further explained that a relevant factor when making such a determination could include the extent to which an individual/entity willfully enables the use of technology for unlawful purposes.
A violation of the BOTS Act will be considered an “unfair and deceptive practice,” in violation of the Federal Trade Commission Act. There is no private right of action available to consumers. The FTC and state attorneys’ general have reserved jurisdiction to investigate and file enforcement actions for consumers that were unable to purchase tickets due to unlawful bot intervention. Penalties for violation can include, without limitation, cease and desist orders, monetary fines, disgorgement of ill-gotten gains, punitive damages and injunctive relief.
It conservatively stands to reason that under specific circumstances the FTC or a state attorney general could attempt to forge avenues whereby it is asserted that a developer substantially assisted in a violation of the BOTS Act by making available technology designed for a prohibited purpose. In addition to substantial assistance, other potential theories of liability could include, without limitation, provision of the means/instrumentalities to commit a deceptive act and/or facilitation of unlawful acts/practices.
A handful of states already have laws in place that ban ticket-bots, including New York and California.
The BOTS Act will almost certainly be subject to clarification and definition once it is challenged and enforced, including its application to software providers. At this early stage of the new law, a less conservative interpretation and application comes with some degree of risk.
Contact an FTC defense lawyer if you are the subject of a regulatory enforcement investigation or action, or if you have questions regarding the BOTS Act.
Richard B. Newman is an Internet marketing compliance and regulatory defense attorney at Hinch Newman LLP focusing on advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state attorneys general, commercial litigation, advising clients on eCommerce guidelines and promotional marketing programs, and negotiating and drafting legal agreements.
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