Fair Trading (Ticket Scalping) Amendment Bill

Mr PEDERICK (Hammond) (17:32): I did not want to miss speaking on this important legislation regarding the Fair Trading (Ticket Scalping) Amendment Bill 2018. My understanding is that at this stage, unless someone wants to speak in the next couple of weeks, I am the last speaker on the bill.

Mr PEDERICK: It is outrageous, I know. This bill fulfils another Marshall Liberal government election commitment to strengthen protections for consumers against ticket scalpers. We are doing this because this bill forms part of a series of amendments to the Fair Trading Act designed to increase consumer rights and protections. The current act does not address technological advances since its original passage, including the advent of ticket bots that purchase tickets online far faster than a person could. The terms in the current act are not well defined and enforcement is currently poor.

I want to relay some information regarding ticket bots. The information is about the man who invented ticket bots and he explains why you cannot get that gig ticket. The article states:

By the time shotgun-wielding FBI agents raided his office, Ken Lowson, a former insurance salesman, had become America's greatest ticket scalper.

From 2001 to 2010, according to the FBI indictment, his company, Wiseguy, had bought and resold 2.5 million tickets and made more than $25 million in profit. The kid from Arizona was living a wild life of drink, drugs and parties in Los Angeles.

He was charged with hacking and defrauding ticket sellers like Ticketmaster. The secret of his success was in the servers the FBI confiscated: computer programs, also known as ticket bots, that automate the process of buying tickets online. The bots grab all the best tickets before human buyers, and then flip them for resale on other sites.

This hyper-charged form of ticket scalping has little in common with the pre-internet era—

which I think was a much gentler era, to be frank, and it should be celebrated by those who can remember the pre-internet era, though I digress—

when men in coats sold paper tickets outside of stadiums.

'We were really good and that was probably our downfall,' Ken said. 'We just took it too far.'

I have edited here slightly. He said they made all the other guys trying to do it very angry. It continues:

'I made it too fast and too young and it got to my head.'

'We had a lot of fun, I'll say that.'

Seven years on from that FBI raid, governments and tickets sellers are still struggling to halt Ken's bot invention. The world's largest ticket seller, Ticketmaster, stopped 6 billion bot attempts last year, at a rate of more than 11,000 per minute.

What these sites rely on is that there is no government oversight. They use countries that are known as tax havens when they run these bots. The US enacted a national law outlawing bots in December 2016. There have been no prosecutions to date when this information was written. It continues:

High-profile scalping continues.

'Last I heard, the smart ones are moving to places like Gibraltar and Isle of Man and stuff like that—if they're outside of a nation state's jurisdiction, and then they're able to buy then how is a government going to go after somebody?,' [Ken]…said.

Ticketmaster [said]…that bot traffic often comes from 'Eastern Europe'.

Websites like Shows on Sale or Ticket Crusader tell members when tickets are going on sale. They claim they help 'beat the bots', but they can equally be used by scalpers with bots.

One of the top-ranked websites selling bots is registered in Panama—the tiny Caribbean country known for a canal, good beaches, and tax evasion. The website sells a range of bots for $300-$900.

A salesperson from the website said the software works in Australia and users can mask their identities with proxy IP addresses.

'The software doesn't expose your identity or anything,' the seller wrote in an email.

'We have been around for more than a decade and have been actively supporting our product more than ever.'

'No one except God can shut us.'

The seller said the software bypasses the CAPTCHA system, which generates tests that humans can pass but bots cannot (like picking out words behind squiggly lines), by using 'third party bypassing companies that type the CAPTCHAS for you'.

That is, there's a chance there's a human somewhere, possibly in India, typing numbers and letters into a CAPTCHA box so that a bot, which has been sold in Panama, and possibly launched from Eastern Europe, can buy tickets in Australia.

How were these bots invented? The article continues:

The first bots used by Ken's company were simple programs, like auto-fill, that saved his staff from filling out the same form over and over again. But he quickly saw their potential and began creating better bots. 'We started out with four computers, and as time went by, we got bigger and bigger, we got more programmers, more computers.' A single bot could open hundreds of windows and run through the process of buying a ticket simultaneously on each window. Ken would assign a 'power' to each show—a bot with 300 power meant the equivalent of 300 people buying tickets. 'Over time they were able to hit and buy 20,000 tickets in a couple of minutes,' he said.

Ken's company also shaved milliseconds off ticket buying by exploiting the lag—or latency—of data signals crossing the country. 'What we did is we spread 30 servers geographically around the country and every time sure as [heck] only one of them would get all the seats, Ken said. For example, when tickets for the 2006 Rose Bowl—the Superbowl of US college football—went on sale, Wiseguy bought 882 out of 1,000.

The FBI indictment lists other examples: In 2007, Wiseguy bought more than 11,700 Bruce Springsteen tickets, worth about $1.3 million, as well as 1,924 tickets to the New York Yankee playoffs, and 11,984 tickets to Miley Cyrus concerts. Ken claims Wiseguy 'dominated 90 per cent' of ticket sales in America. They sold tickets to other scalpers, or 'brokers', who sold directly to fans.

After the FBI raided his office, Ken and his colleagues faced 42 charges of hacking and defrauding ticket sellers. His lawyers argued his bots went through the same ticket-buying process as a human, only much faster. He had not hacked the site. Ultimately, he accepted a plea deal and stayed out of jail. 'There was never a ticket crime they could get us on, including the bots,' he said.

So he is obviously very proud of what he managed to do, ripping off not just the system but consumers to get equitable access to sports events and concerts. The article continues:

Ticketmaster is owned by Live Nation, the world's largest events company. Live Nation also owns Australian venues and festivals and manages artists…In a written statement, a Ticketmaster spokesperson said: 'Ticketmaster has always championed transparency and consumer protection within Australia, across both the primary and secondary markets. We welcome new legislation and we will continue to work with industry to ensure that tickets get directly into the hands of fans.

'In the ticketing industry, bots are often used in an attempt to unfairly purchase tickets that should always be available for fans. Ticketmaster works to combat bots every day to make ticket availability and the overall ticket buying process better. Bots violate Ticketmaster's terms of use, and are, in many cases, illegal.'

Since that article came out about the FBI chase, New South Wales has enforced its own legislation in regard to scalpers, and this is very much similar legislation. Under the Major Events Act, what happens now is that the government needs to declare an event as a major event for the ticket scalping provisions to be operative.

We will repeal section 9 of the Major Events Act and amend the Fair Trading Act so that the laws apply to any event in South Australia that is subject to resale restrictions, prohibiting the advertising or its hosting of any event where tickets are selling for over 110 per cent of the ticket price, in addition to capping the total resale price to 110 per cent of the total price and requiring that any resale advertisement includes specific details such as the original cost and seating arrangements.

We will outlaw software such as ticket bots, and I just gave a fair description of one operator which contravenes the terms and conditions of websites that sell tickets, and increase the number of compliance officers for enforcement of minor breaches. Expiable offences will also be introduced to enable quick and effective enforcement of minor breaches without having to pursue costly court action. This will also act as an effective deterrent for others. There will also be a public education campaign about the changes being made to ticket-scalping laws.

This government recognises that legitimate circumstances do exist in which a person may want to resell their tickets and that therefore there is a need for a secondary market. Things happen: people get ill, people can be called away for whatever reason and tickets may have been purchased days, weeks or months earlier. However, that secondary market should not be at the expense of consumers' rights.

In regard to the drafting of the bill, Consumer and Business Services consulted with the Tourism Commission. As I indicated, the bill is largely modelled on legislation that passed in New South Wales earlier this year. We certainly heard a lot of stories about different events that members have attended.

Mr Koutsantonis: What concerts do you like?

Mr PEDERICK: I was just about to get to that, member for West Torrens. You just about read my mind.

Mr Koutsantonis: You are an ABBA man, no doubt.

Mr PEDERICK: No, it has been mentioned in this place that I am an avid Kiss fan. I have been a Kiss follower for decades. Music like Love Gun, Beth and a whole range of songs. I tell you what, some of their best music was done in their concert in Melbourne with the Melbourne Symphony Orchestra. If members ever get the opportunity they should listen to Kiss with the Melbourne Symphony Orchestra playing alongside. It is a delight.

Mr Koutsantonis: Peter Criss, know Peter Criss? What are your views? Do you want to tell us?

Mr PEDERICK: You can have your opportunity in a moment, member for West Torrens. As we have got on to concerts, I will expand. I think it was 1980 when I attended a Kiss concert here in Adelaide; it was at Memorial Drive. I took my two younger brothers, who were quite young and still at school, but I had been out of school for a couple of years.

Mr Koutsantonis: Did you have your make-up on?

Mr PEDERICK: No, I didn't have the make-up on. That was quite a concert. From what I can remember, they could not do all the act with the fire because there was too much wind, so that was a slight disappointment, but I have been to another Kiss concert here in Adelaide since then. I also saw Dire Straits at Football Park. I think they had to operate under noise restrictions, which is a little—

Mr Koutsantonis: Mick Jagger, Thebby, Oval?

Mr PEDERICK: No, I didn't do Mick. Certainly, I have had the absolute pleasure and enjoyment to attend two AC/DC concerts at Adelaide Oval—they are one band. Sadly, we are not going to hear the fullness of AC/DC certainly in its original form ever again. My family has a bit of a link to AC/DC: Bon Scott came from the same town in Scotland my grandmother's family came from—Kirriemuir in Scotland, which is the name of my family farm at Coomandook, just for a little bit of digression. They certainly make good music, but I think their second to last concert was better than the last one.

Everyone has different tastes. I was not originally going to go to the Adele concert, but I managed to get hold of a couple of tickets at the last minute. I must say that it was a one-woman show, all night, and it was absolutely fantastic. As you can see, that is a bit of a shift from AC/DC and Kiss. Obviously, these concerts are held in Adelaide, but a lot of regional people come to these concerts, and it is fantastic that we have the opportunity, no matter where they are held.

As I said, we have had plenty of functions at Memorial Drive, at the old Football Park and now at Adelaide Oval. They are going to do some protection of that beautiful lawned area they have on Adelaide Oval, that grass that is grown in my electorate at Langhorne Creek, the surface area there. That is why we are moving this legislation—so that people have equity of access and do not have to fight against bots, where it is basically impossible to get a ticket.

Take something as simple as Sounds by the River, which is a fantastic event coordinated by Deb Alexander at Mannum. They have 5,000 tickets and I kept thinking, 'I need to buy a ticket for Sounds by the River'. I went online and I was diverted to a bogus site. Thankfully, I went to one of my staff who is a bit more internet friendly than I am and said, 'This looks a bit rich.' She had a quick look around and found the tickets on the appropriate site and we got them for the appropriate price. Even things like that can catch you out because these sites are dressed up to get around people and fool them.

I would love to talk more about concerts, but I am running out of time. I commend the bill, and I hope that we see its speedy progression when we come back in a couple of weeks' time.