[House Report 114-733]
[From the U.S. Government Publishing Office]
114th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 114-733
======================================================================
BETTER ON-LINE TICKET SALES ACT OF 2016
_______
September 9, 2016.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Upton, from the Committee on Energy and Commerce, submitted the
following
R E P O R T
[To accompany H.R. 5104]
[Including cost estimate of the Congressional Budget Office]
The Committee on Energy and Commerce, to whom was referred
the bill (H.R. 5104) to prohibit, as an unfair and deceptive
act or practice in commerce, the sale or use of certain
software to circumvent control measures used by Internet ticket
sellers to ensure equitable consumer access to tickets for any
given event, and for other purposes, having considered the
same, reports favorably thereon with an amendment and
recommends that the bill as amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 3
Background and Need for Legislation.............................. 3
Hearings......................................................... 5
Committee Consideration.......................................... 5
Committee Votes.................................................. 5
Committee Oversight Findings..................................... 7
Statement of General Performance Goals and Objectives............ 7
New Budget Authority, Entitlement Authority, and Tax Expenditures 7
Earmark, Limited Tax Benefits, and Limited Tariff Benefits....... 7
Committee Cost Estimate.......................................... 7
Congressional Budget Office Estimate............................. 7
Federal Mandates Statement....................................... 8
Duplication of Federal Programs.................................. 8
Disclosure of Directed Rule Makings.............................. 8
Advisory Committee Statement..................................... 8
Applicability to Legislative Branch.............................. 8
Section-by-Section Analysis of the Legislation................... 8
Changes in Existing Law Made by the Bill, as Reported............ 9
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Better On-line Ticket Sales Act of
2016'' or the ``BOTS Act''.
SEC. 2. UNFAIR AND DECEPTIVE ACTS AND PRACTICES RELATING TO USE OF
TICKET ACCESS CIRCUMVENTION SOFTWARE.
(a) Sale of Software.--It shall be unlawful for any person to sell or
offer to sell, in commerce, any computer software, or part thereof,
that--
(1) is primarily designed or produced for the purpose of
circumventing a technological measure that limits purchases
made via a computerized event ticketing system;
(2) has only limited commercially significant purpose or use
other than to circumvent a technological measure that limits
purchases made via a computerized event ticketing system; or
(3) is marketed by that person for use in circumventing a
technological measure that limits purchases made via a
computerized event ticketing system.
(b) Use of Software.--It shall be unlawful for any person to use any
computer software, or part thereof, described in subsection (a) of this
section, to purchase an event ticket via a computerized event ticketing
system in violation of the system operator's posted limits on the
sequence or number of transactions, frequency of transactions, or
quantity of tickets purchased by a single user of the system, or on the
geographic location of any transactions.
(c) Resale of Tickets.--It shall be unlawful for any person to engage
in the practice of reselling in commerce, event tickets acquired in
violation of subsection (b) of this section if the person either--
(1) participated directly in or had the ability to control
the conduct in violation of subsection (b); or
(2) knew or should have known that the event tickets were
acquired in violation of subsection (b).
(d) Definitions.--As used in this section--
(1) the term ``computerized event ticketing system'' means a
system of selling event tickets, in commerce, via an online
interactive computer system that effectively limits the
sequence or number of ticket purchase transactions, frequency
of ticket purchase transactions, quantity of tickets purchased,
or geographic location of any ticket purchase transactions;
(2) the term ``event ticket'' means a ticket entitling one or
more individuals to attend, in person, one or more events to
occur on specific dates, times, and geographic locations; and
(3) to ``circumvent a technological measure'' means to avoid,
bypass, remove, deactivate, or impair a technological measure,
without the authority of the computerized event ticketing
system operator.
(e) Rule of Construction.--Notwithstanding the prohibitions set forth
in subsections (a) and (b), it shall not be unlawful under this section
to create or use any computer software, or part thereof, to--
(1) investigate or further the enforcement or defense of any
alleged violation of this section; or
(2) engage in research necessary to identify and analyze
flaws and vulnerabilities of a computerized event ticketing
system, if these research activities are conducted to advance
the state of knowledge in the field of computer system security
or to assist in the development of computer security products.
(f) Enforcement by the Federal Trade Commission.--A violation of
subsection (a), (b), or (c) shall be treated as an unfair and deceptive
act or practice in violation of a regulation issued under section
18(a)(1)(B) of the Federal Trade Commission Act (15 U.S.C.
57a(a)(1)(B)).
(g) Enforcement by States.--
(1) Authorization.--Subject to paragraph (2), in any case in
which the attorney general of a State has reason to believe
that an interest of the residents of the State has been or is
threatened or adversely affected by a violation of subsection
(a), (b), or (c), the attorney general of the State may, as
parens patriae, bring a civil action on behalf of the residents
of the State in an appropriate district court of the United
States to obtain appropriate relief.
(2) Rights of federal trade commission.--
(A) Notice to ftc.--
(i) In general.--Except as provided in clause
(iii), the attorney general of a State shall
notify the Federal Trade Commission in writing
that the attorney general intends to bring a
civil action under paragraph (1) before
initiating the civil action against a person
for a violation of subsection (a), (b), or (c).
(ii) Contents.--The notification required by
clause (i) with respect to a civil action shall
include a copy of the complaint to be filed to
initiate the civil action.
(iii) Exception.--If it is not feasible for
the attorney general of a State to provide the
notification required by clause (i) before
initiating a civil action under paragraph (1),
the attorney general shall notify the
Commission immediately upon instituting the
civil action.
(B) Intervention by the ftc.--The Federal Trade
Commission may--
(i) intervene in any civil action brought by
the attorney general of a State under paragraph
(1); and
(ii) upon intervening, be heard on all
matters arising in the civil action, and file
petitions for appeal of a decision in the civil
action.
(3) Pending action by the federal trade commission.--If the
Federal Trade Commission institutes a civil action or an
administrative action with respect to a violation of subsection
(a), (b), or (c), the attorney general of a State may not,
during the pendency of such action, bring a civil action under
paragraph (1) against any defendant named in the complaint of
the Commission for the violation with respect to which the
Commission instituted such action.
PURPOSE AND SUMMARY
The purpose of the Better On-line Ticket Sales (BOTS) Act
of 2016 (H.R. 5104) is to prevent any person from selling or
using software that circumvents the safeguards event ticket
sellers put in place to ensure equitable access to tickets.
H.R. 5104 would prohibit the sale or use of any computer
software that (1) is primarily designed to circumvent measures
to limit event ticket purchases, (2) has only limited
commercial purposes aside from such circumvention, or (3) is
marketed for use in such circumvention. The legislation also
prohibits the purchase of any event ticket in violation of the
ticket seller's posted ticket sale limits. Finally, H.R. 5104
prohibits the resale of tickets purchased initially in
violation of H.R. 5104, where the reseller knew or should have
known that the tickets were acquired in violation of H.R. 5104
or where the reseller participated directly in or had the
ability to control such acquisition.
H.R. 5104 contains a rule of construction clarifying that
the prohibitions in the legislation do not render
investigations of a violation of H.R. 5104 or certain research
activities unlawful.
The Federal Trade Commission (FTC) is the primary enforcer
of H.R. 5104. Subject to certain restraints outlined in the
legislation, a State attorney general may also enforce the
provisions of H.R. 5104 if the State attorney general has
reason to believe that an interest of the residents of the
State has been threatened or adversely affected by a violation
of H.R. 5104. State attorneys general would be required to
notify the FTC in writing when they bring civil actions under
the statute, unless it is infeasible to do so, and are
precluded from State enforcement actions during the pendency of
an FTC enforcement action involving the same violation and a
common defendant.
BACKGROUND AND NEED FOR LEGISLATION
The market for live event tickets has encountered
challenges from ticket brokers who use software to circumvent
the safeguards primary ticket sellers use to limit ticket
purchases. This software is commonly referred to as ``ticket
bots.'' Ticket bots perform different functions, but generally
operate by (1) automatically and continuously checking ticket
seller websites for ticket releases; (2) automatically
reserving and displaying available tickets for the human
operator; (3) automatically buying tickets using as many names,
addresses, and credit card numbers as necessary to appear to be
individual ticket buyers; and (4) defeating anti-ticket bot
security measures such as Completely Automated Public Turing
(CAPTCHA) tests.\1\
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\1\Eric T. Schneidermann, New York State Attorney Gen., Obstructed
View: What's Blocking New Yorkers From Getting Tickets 15-16 (Jan.
2016), available at http://www.ag.ny.gov/pdfs/Ticket_Sales_Report.pdf
[New York Study].
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In many cases, primary ticket sellers limit purchases by
buyers. For example, ticket sellers often make tickets
available to the general public on a set date and time\2\ and
may limit the number of tickets to four or six per purchasing
party.\3\ These measures are to ensure that ticket buyers have
an equitable chance of acquiring tickets to the live event,
which are necessarily finite in number. Ticket sellers also
generally prohibit the use of automated software to purchase
bulk tickets, which would defeat the technical safeguards to
ticket purchase limitations. For example, Ticketmaster
prohibits the ``[u]se of any automated software or computer
system to search for, reserve, buy or otherwise obtain tickets
. . . available on the Site. . . .''\4\
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\2\Letter from William M. Rubenstein, Commissioner of Consumer
Protection, State of Connecticut, to Hon. Paul Doyle, State Senator,
Co-Chair, General Law Committee, State of Connecticut, et al. 4 (Feb.
22, 2012), available at http://www.ct.gov/dcp/lib/dcp/pdf/publications/
final_ticket_letter.pdf (``The date on which tickets will be available
to all members of the public is known as the ``public on-sale date.'')
[Connecticut Report].
\3\Legislative Hearing on 17 FTC Bills Before the Subcomm. on
Commerce, Manufacturing, and Trade of the H. Comm. on Energy and
Commerce, 114th Cong. 2 (2016) (statement of Gil Genn, Maryland Sports
& Entertainment Industry Coalition) (``. . . for most live
entertainment events there is a restriction on the number of seats one
purchaser can buy--usually between 4 and 8 tickets.'') [Genn
Testimony].
\4\Ticketmaster, Terms of Use, http://www.ticketmaster.com/h/
terms.html (last visited Aug. 17, 2016).
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Ticket brokers' use of ticket bots has frustrated the
intentions of performers\5\ and other ticket sellers\6\ to make
tickets available equitably and at reasonable prices. Primary
ticket sellers have estimated that 60 percent of the most
desirable tickets for some shows are obtained by ticket
bots.\7\ Ticket bots have also enabled brokers to purchase and
then sell large swaths of event tickets on the secondary market
at exorbitant prices. One study finds that, on average, brokers
mark up the price of tickets on the secondary market by 49
percent of the primary ticket seller's price.\8\ The ability to
buy massive amounts of tickets against primary ticket sellers'
terms and technical controls, however, has enabled them to mark
up the price by over 1,000 percent.\9\
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\5\See, e.g., Lin-Manuel Miranda, ``Stop the Bots From Killing
Broadway,'' N.Y. Times (June 7, 2016), available at http://
www.nytimes.com/2016/06/07/opinion/stop-the-bots-from-killing-
broadway.html; Patrick Doyle, ``Eric Church on Scalpers, Bro-Country
and Blake Shelton Scandal,'' Rolling Stone (June 11, 2014), available
at http://www.rollingstone.com/music/news/eric-church-on-scalpers-bro-
country-andblake-shelton-scandal-20140611.
\6\Genn Testimony, at 2 (``It is unfair to the younger fans who
have discovered these legends to have to pay exorbitant prices to
secondary ticket sellers when they are also concerned about their first
job salary, saving for college or even paying-off student loans, and
real-life expenses.'').
\7\Ben Sisario, ``Concert Industry Struggles With `Bots' That
Siphon Off Tickets,'' N.Y. Times (May 26, 2013), available at http://
www.nytimes.com/2013/05/27/business/media/bots-that-siphon-off-tickets-
frustrate-concert-promoters.html.
\8\New York Study at 4.
\9\Id.
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Several States have enacted laws to combat ticket bots.\10\
In addition, New York and Connecticut have each conducted
reports of the market for event tickets in those States.\11\
These reports focus more broadly on the ticket market as a
whole, but include some data on ticket bots. H.R. 5104 would
encourage the FTC to put its resources toward combating the
problem of ticket bots and provide an enforcement tool for
States by authorizing State attorneys general to enforce the
Federal statute.
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\10\Shawntaye Hopkins, Blame it on the Bots: States Act to Ban
Ticket-Buying Software, The Current State (Council of State Gov'ts),
Jul.-Aug. 2016 available at http://www.csg.org/pubs/capitolideas/enews/
cs53_1.aspx (``about a dozen states have laws that ban ticket bots. . .
.'').
\11\See New York Study; Connecticut Report.
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HEARINGS
The Subcommittee on Commerce, Manufacturing, and Trade held
a hearing on H.R. 5104, along with several other bills, on May
24, 2016. The Subcommittee received testimony from:
Edith Ramirez, Chairwoman, Federal Trade
Commission;
Joshua D. Wright, University Professor,
Antonin Scalia Law School at George Mason University;
Geoffrey Manne, Founder and Executive
Director, International Center for Law and Economics;
Daniel Castro, Vice President, Information
Technology and Innovation Foundation;
Abigail Slater, General Counsel, Internet
Association;
Michael Best, Senior Policy Advocate,
Consumer Federation of America;
David Vladeck, Professor of Law, Georgetown
Law;
Richard Hendrickson, President and CEO,
Lifetime Products;
Greg O'Shanick, President and Medical
Director, Center for Neurorehabilitation Services;
Stephen Shur, President, Travel Technology
Association;
Robert Arrington, President, National
Funeral Directors Association;
John Breyault, Vice President of Public
Policy, Telecommunications and Fraud, National
Consumers League;
Gil Genn, Maryland Sports and Entertainment
Industry Coalition; and
Jamie Pena, Vice President, Revenue Strategy
and Global Distribution, Omni Hotels and Resorts.
COMMITTEE CONSIDERATION
On June 8 and 9, 2016, the Subcommittee on Commerce,
Manufacturing, and Trade met in open markup session and
forwarded H.R. 5104, as amended, to the full Committee by a
voice vote. On July 12, 13, and 14, 2016, the full Committee on
Energy and Commerce met in open markup session and ordered H.R.
5104 reported to the House by a voice vote.
COMMITTEE VOTES
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. No
other recorded votes were requested. The following reflects the
record votes taken during the Committee consideration:
COMMITTEE OVERSIGHT FINDINGS
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee held a hearing and made
findings that are reflected in this report.
STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES
The goal of H.R. 5104 is to prevent any person from selling
or using software that circumvents the safeguards event ticket
sellers put in place to ensure equitable access to tickets.
NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee finds that H.R.
5104 would result in no new or increased budget authority,
entitlement authority, or tax expenditures or revenues.
EARMARK, LIMITED TAX BENEFITS, AND LIMITED TARIFF BENEFITS
In compliance with clause 9(e), 9(f), and 9(g) of rule XXI
of the Rules of the House of Representatives, the Committee
finds that H.R. 5104 contains no earmarks, limited tax
benefits, or limited tariff benefits.
COMMITTEE COST ESTIMATE
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
CONGRESSIONAL BUDGET OFFICE ESTIMATE
U.S. Congress,
Congressional Budget Office,
Washington, DC, September 9, 2016.
Hon. Fred Upton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 5104, the Better
On-line Ticket Sales Act of 2016.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Stephen
Rabent.
Sincerely,
Mark P. Hadley,
(For Keith Hall, Director).
Enclosure.
H.R. 5104--Better On-line Ticket Sales Act of 2016
H.R. 5104 would prohibit the sale or use of software that
circumvents technology used by ticket sellers to prevent mass
ticket purchases online. The bill also would prohibit the
resale of tickets obtained in that manner. The Federal Trade
Commission (FTC) would enforce the proposed prohibition.
Based on information from the FTC about its current
enforcement capabilities, CBO estimates that increased costs
related to monitoring and enforcing the new prohibitions
established by H.R. 5104 would total less than $500,000 per
year; such spending would be subject to the availability of
appropriated funds.
In addition, CBO estimates that enacting H.R. 5104 would
increase federal revenues from civil penalties imposed to
enforce the new prohibition; therefore, pay-as-you-go
procedures apply. However, CBO estimates that those collections
would be insignificant because of the small number of cases
that the agency would probably pursue. Enacting the bill would
not affect direct spending.
CBO estimates that enacting H.R. 5104 would not increase
net direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2027.
H.R. 5104 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, or tribal
governments.
The CBO staff contact for this estimate is Stephen Rabent.
The estimate was approved by Theresa Gullo, Assistant Director
for Budget Analysis.
FEDERAL MANDATES STATEMENT
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
DUPLICATION OF FEDERAL PROGRAMS
No provision of H.R. 5104 establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
DISCLOSURE OF DIRECTED RULE MAKINGS
The Committee estimates that enacting H.R. 5104
specifically directs to be completed no rulemakings within the
meaning of 5 U.S.C. 551.
ADVISORY COMMITTEE STATEMENT
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
APPLICABILITY TO LEGISLATIVE BRANCH
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION
Section 1. Short title
Section 1 provides that the Act may be cited as the
``Better On-line Ticket Sales Act of 2016'' or the ``BOTS
Act.''
Section 2. Unfair and deceptive acts and practices relating to use of
ticket access circumvention software
This section makes it unlawful for any person to sell or
offer to sell software that (1) is primarily designed or
produced to circumvent technological measures limiting
purchases made via computerized event ticketing system; (2) has
only limited commercially significant purpose or use other than
for such circumvention; or (3) is marketed by a person as
software intended for such circumvention. The section further
makes it unlawful to use such software in violation of a ticket
seller's posted ticket purchasing rules regarding the sequence,
number, or frequency of transactions, quantity of tickets
purchased by a single user, or on the geographic location of
transactions. The section also renders it unlawful for any
person to sell any ticket that has been obtained by that
person, or another, using circumvention software, if the
secondary seller either participated directly or had the
ability to control the unlawful conduct or knew or should have
known that the tickets were obtained in violation of the
section.
This section further provides a rule of construction
clarifying that it is not unlawful to use circumvention
software to investigate or further the enforcement or defense
of any alleged violation of this section; or engage in research
necessary to identify and analyze flaws and vulnerabilities.
This section sets forth that a violation of this Act will be
treated as an unfair or deceptive act or practice under the
Federal Trade Commission Act and authorizes State attorneys
general to enforce its provisions.
CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
This legislation does not amend any existing Federal
statute.
[all]