Yesterday, the Department of Justice announced that the event and concert ticket distributor and seller Ticketmaster will pay a $10 million criminal fine for unlawfully accessing a competitor’s computer system. According to the press release, the penalty is a component of a deferred prosecution agreement Ticketmaster and the United States Attorney’s Office entered into to resolve a five-count criminal information filed on Dec. 30 charging Ticketmaster with computer intrusion and fraud offenses.
According to this week’s announcement, the “victim company” offered artists the ability to sell presale tickets online and offered a feature known as the “Artist Toolbox,” a password-protected app that provided real-time data about tickets sold through the company. In 2013, an unnamed former employee of the victim company began to work for Live Nation Entertainment, Inc., Ticketmaster’s parent company, and reportedly took proprietary information with them.
According to the Justice Department, Ticketmaster used stolen passwords to illegally collect business intelligence. It allegedly sought to capture part of its rival’s business through the conversion of two of its most important clients.
A Ticketmaster executive reportedly stated that the goal of its underhanded operation was to “choke off” the victim company, to which the victim company’s former employee, a co-conspirator, replied that by taking away a major client’s presale business, they could “cut (victim company) off at the knees.” The Justice Department announcement also noted that in 2019, the former head of Ticketmaster’s Artist Services division pled guilty to conspiring to commit computer intrusions and wire fraud based on his participation in the same scheme.
“Today’s resolution demonstrates that any company that obtains a competitor’s confidential information for commercial advantage, without authority or permission, should expect to be held accountable in federal court,” said Acting U.S. Attorney Seth D. DuCharme. FBI Assistant Director-in-Charge William F. Sweeney, Jr. added that “this investigation is a perfect example of why these laws exist – to protect consumers from being cheated in what should be a fair market place.”
According to the deferred prosecution agreement, Ticketmaster will not only pay fines, but must also maintain a Computer Fraud and Abuse Act compliance and ethics program, and report to the United States Attorney’s Office about its efficacy. Should it breach the agreement, Ticketmaster will be subject to prosecution.
The FBI’s New York Field Office conducted the investigation, and the United States Attorney’s Office is handling the government’s case.
