The High Court recently released a decision on Viagogo GmbH's (formerly Viagogo AG) trading practices (Commerce Commission v Viagogo AG [2024] NZHC 713). The case is a good reminder of the fair trading issues that businesses should be aware of when selling online and also adds to the few examples of courts dealing with unfair contract terms in New Zealand to date.
This update sets out the key findings of the case and implications for businesses to consider.
Background
Viagogo GmbH (Viagogo) is an online ticket-reselling platform based in Switzerland, where sellers can resell tickets. This is different to ticketing agents, such as Ticketek or Ticketmaster, who are ticket sellers authorised by the host of the event to sell tickets to consumers on their behalf.
The Commerce Commission began investigating Viagogo in 2017, after numerous consumer complaints were made about the tickets sold on its website.
Following the investigation, the Commerce Commission brought legal proceedings against Viagogo in 2018. During early skirmishes, Viagogo had challenged assertions that it was subject to New Zealand's jurisdiction. Viagogo ultimately withdrew its challenge (accepting that New Zealand law applied) before the matter went to trial, with a substantive hearing happening in early 2024. In that hearing, the Commerce Commission submitted that Viagogo breached the Fair Trading Act 1986 (FTA) by:
- Making misleading representations as to:
- its status as a ticket-reselling platform
- the demand for and number of tickets left on its website for an event
- the price of tickets (drip pricing)
- its status as an "official site"
- consumer guarantees that it makes in relation to the tickets purchased - Including unfair contract terms in its standard terms and conditions.
Key findings
Headline representations
On its website, Viagogo made representations with wording such as "only a few tickets left" or that tickets are "likely to sell out soon", "about to sell out" or "almost gone" while consumers waited for their ticket orders to be processed.
These representations were initially unqualified, but a small "i" icon was later added next to these statements, which stated that the representations only referred to the tickets left on Viagogo's website and not from all sources.
The High Court found that despite the icon, these representations misled consumers into believing that not many tickets were left nor available anywhere else, and therefore declared that Viagogo breached sections 9 (misleading and deceptive conduct or conduct that would likely mislead or deceive) and 13(e) (false or misleading representations) of the FTA. Importantly (but consistent with other similar decisions like Godfrey Hirst NZ Limited v Cavalier Bremworth Limited [2014] NZCA 418), the icon was not enough to ensure that the qualification is sufficiently drawn to the attention of consumers, as consumers needed to either click on or hover over the icon to display the qualifying text.
Drip pricing
Viagogo displayed the initial price for tickets (excluding additional fees) throughout the ticket selection and checkout process. It was not until the payment page that Viagogo disclosed the final price, this being the initial price and both the booking fee and delivery fee. The High Court found that such practice misled consumers into believing that they were purchasing tickets at the initial price and therefore declared that Viagogo breached sections 9, 11 and 13(g) of the FTA.
The inclusion of a "General Notes" section detailing that additional fees will be applied to the initial price at the bottom of the page where consumers first pick their tickets was not prominent nor proximate enough to mitigate the risk of the consumer being misled.
Unfair contract terms (UCTs)
The High Court declared that Viagogo's standard term requiring consumers to submit to the jurisdiction of the courts of Geneva was an unfair contract term under sections 46I and 46L of the FTA. This is because:
- It caused a significant imbalance in the parties' rights and obligations. The term permitted Viagogo to raise a dispute in either the courts of Geneva or the courts of New Zealand if the consumer is based in New Zealand, whereas a New Zealand-based consumer can only raise a dispute in the courts of Geneva. Doing so also rules out the possibility of a New Zealand-based consumer bringing any litigation proceeding against Viagogo
- It was not reasonably necessary to protect Viagogo's legitimate interest against being required to respond to litigation in multiple jurisdictions. Any dispute raised will likely be a claim for a refund for invalid tickets refused at gate, which can be expediently resolved in the Disputes Tribunal. With that in mind, the High Court considered there should be no reason why a worldwide business operating solely online like Viagogo, could not participate in a hearing by audiovisual link or attend any hearing through its appointed representative.
No UCT finding was made for providing Swiss law as the applicable governing law as there was no evidence to suggest that this would benefit Viagogo or be disadvantageous to consumers.
The result and implications for businesses
Viagogo has appealed the High Court's decision and we will be watching it with interest. In the meantime, the case is still a valuable reminder that:
- Headline representations: Businesses need to make sure that where they have headline representations about a product or service, they make qualifying messages prominent enough and clear enough to the headline message
- Drip pricing: When selling online, businesses must make sure that any additional fees that automatically apply to a purchase or are fixed are disclosed as early in the checkout process as possible to ensure that consumers are aware of all fees applicable to the final price
- UCTs: Although the High Court's decision did not need to consider the point at which overseas entities become subject to New Zealand jurisdiction, it is clear that the Commission is willing to challenge the conduct of overseas-based companies that transact with New Zealand consumers. Foreign exclusive jurisdiction clauses (especially where they have imbalanced impact) may be challenged in New Zealand on the basis that they are unfair.
If you would like assistance with FTA compliance or reviewing standard form contracts to identify any unfair contract terms, please contact our consumer law team.
This article was co-authored by Pearlyn Tan (law clerk), Keri Johansson (special counsel), Susie Kilty (partner) and Anna Parker (special counsel).
