StubHub settles with state after rescinding COVID-19 refund offer

California Attorney General Rob Bonta announced a settlement with StubHub Inc. resolving some $20 million in cash refunds for events cancelled during the onset of the COVID-19 pandemic. The company had initially promised to provide affected purchasers cash refunds but later rescinded the offer.

The terms of the agreement include a $295,000 penalty for StubHub and injunctive terms prohibiting the company from violating state consumer protection statutes and making misrepresentations about its return policy.

"By failing to issue full cash refunds for canceled events during the pandemic, StubHub not only violated its advertised policy but also violated the trust of its consumers," Bonta said in a news release on Thursday.

Bonta's office filed the complaint and the proposed judgment in Los Angeles County Superior Court on Thursday. People of the State of California v. StubHub, Inc., 24STCV21332 (L.A. Super. Ct., filed Aug. 22, 2024).

StubHub Deputy General Counsel John Lawrence of Washinton D.C. praised the settlement in an emailed statement on Friday.

"We are pleased to have reached a resolution with the California Attorney General regarding the difficult decision to adjust our refund policy for canceled events at the height of the COVID-19 pandemic," Lawrence said. "In 2021, as soon as circumstances allowed, StubHub ensured that consumers impacted by this adjustment were made whole, offering them the choice between retaining their 120% credit for canceled events or receiving a cash refund. We remain committed to upholding our FanProtect Guarantee and ensuring the best possible experience for our customers."

According to Bonta's complaint, StubHub had heavily advertised its FanProtect guarantee, which granted full cash refunds for cancelled events, leading up to and during the early days of the pandemic. These efforts included a March 2020 email to customers addressing COVID-19 and offering a choice between a full refund and 120% credit for future event tickets.

Later that month, the complaint said, customers received another message rescinding the option of a full refund.

"StubHub did not provide refunds to consumers for many months during the COVID-19 pandemic," the complaint read. "By failing to honor it's guarantee to consumers to provide refunds for canceled events, StubHub misled consumers who reasonably relied on the advertised policy when purchasing tickets from StubHub's platform."

In addition to the monetary restitution, the settlement prohibits StubHub from acts that violate the Unfair Competition Law, False Advertising Law, Consumer Legal Remedies Act and state ticket seller provisions. StubHub is also prohibited from making misrepresentations about its cancellation or refund policies.

Ted Mermin, executive director of the UC Berkeley Center for Consumer Law and Economic Justice, praised the efforts of Bonta's office in an email on Friday.

"For sellers, this is a reminder of what the law is and of the importance of sticking by their advertised promises," Mermin said. "For consumers, the world of ticket buying has been tough in recent years. Tickets are expensive, they're bought up by bots, and even when you can find them the price is driven up by junk fees."

Mermin also praised Assemblymember Laura Friedman, D-Glendale, for writing Assembly Bill 8, which guarantees full refunds to ticket holders within 30 days if an event is cancelled.

"Since the new law requires refunds, ticket sellers are now on the hook no matter what their return policies may state," he said. "In fact, it wouldn't surprise me to see sellers advertising that refunds will be provided in the event of a cancellation, since by law they now have to make the refund anyway."

Michael Simkovic, a professor at USC Gould School of Law, said similar settlements with ticket sellers are likely to follow, but that the market would continue to have a hand in shaping their cancellation and refund policies.

"It depends on how much consumers value the return policy and pay attention to it and decide who to buy tickets from based on the return policy," Simkovic said in an email on Friday.