Chargebacks

Sep 4, 2023

Ecommerce Industry Guide: E-Ticketing & Events

If you’re looking for an industry that has almost completely transformed over the past several years, the ticketing and events industry is a safe bet. Although this was once a market that was shared by emerging websites and brick-and-mortar box offices, the pandemic shifted nearly everything online. Think about it — when was the last time you stood in line to buy a concert or theater ticket?

Now that the convenience of online ticketing is a consumer expectation, companies need to understand how to deliver the best customer experience, which includes protecting their customers from fraud and false declines.

Ticketing and Events Sales Have Shifted Online

The pandemic completely disrupted the ticketing and events industry — first by shutting down all live shows and then by leaning on contactless methods to sell and distribute tickets as venues opened again. This led to expansion across the industry.

Online ticketing continued to grow in popularity as more consumers used smartphones and mobile devices to make other purchases. North America has experienced the most growth. For instance, in Q2 2022 alone, U.S.-based concert management company Live Nation Entertainment hosted 12,500 events, which was an increase of 2,500 shows from the entire year in 2019. Show attendance was up as well, with 33.5 million attendees, compared to 27 million in 2019.

Overall, the online ticketing and events market is expected to grow from US$77.5 billion in 2023 to $97 billion by 2028.

Major e-ticketing companies

When we refer to online ticketing and events, we’re talking about sports, music and other live shows, fairs and festivals, and conferences. These include companies such as:

Across the spectrum of ecommerce companies in the industry, anticipating and responding to trends is key for success.

Industry Trends to Consider

As the online ticketing industry evolves, a number of patterns have emerged.

Post-pandemic FOMO has increased ticket demand

During the pandemic, the lack of events led to a pent-up demand for live entertainment. Consumers experiencing FOMO (fear of missing out) were only too happy to return to concerts and festivals once they became available. As a result, ticket sales skyrocketed, often leading to quick sellouts.

With the influx of new concertgoers — many of whom were less interested in the concert and simply wanted to be somewhere out in public — venues have had to deal with notable changes in event behavior. Attendees who are unfamiliar with “concert etiquette” are known to participate in disruptive behaviors, such as pushing in crowded spaces and engaging in crowd-killing practices, which negatively impact the overall concert experience.

Multigenerational audiences with conflicting needs

Another complicating factor relates to how various generations view and behave at events. Consumers in the Gen Z and millennial generations are usually willing to stand in long lines to get the best open seat or spot in the pit. They are less concerned about comfort and nourishment, but they’re very focused on getting the best spot for social media posts and to be in the presence of artists.

Inversely, Gen X and baby boomer consumers are looking for an experience that is rooted in comfort. They often prefer a seat with a view over standing, and they want to enjoy good food and a selection of beverages. And they are willing to pay more for all of those amenities.

Challenges with ticket purchase and prices

The online shift in ticket sales has posed challenges for customers, especially those unfamiliar with the digital process. Ticketmaster, one of the primary ticketing platforms in LATAM, adopted a virtual queue system, causing difficulties and frustrations for customers trying to secure tickets. Additionally, rising ticket prices, partly attributed to artists' financial losses during the pandemic, affected customer affordability.

Mergers and acquisitions

The popularity of online ticketing has led many of the biggest e-ticketing companies to acquire smaller players that offer unique features. For instance, Ticketmaster acquired Taiwan-based music event ticketing platform Tixcraft in 2022 to expand the company’s reach in Asia and other regions. More recently, Live Nation Entertainment acquired international online ticketing giant Ticketmaster.

These acquisitions are creating huge companies that can dominate markets and give consumers fewer and fewer options to find ticketing deals. In fact, consumers are finding themselves at the mercy of larger online companies and even fraudsters.

Why Is Online Fraud Risk Higher in the Ticketing Industry?

The ticketing industry is rampant with fraud. Over 7,300 incidents of ticket fraud were reported in 2022, with August of that year recording the highest number in history at 764. And it’s only increasing.

Research company VPNOverview recently stated that £6.2 million was lost to ticket fraud in 2022. The most common victims have been consumers aged 20 to 29. In the United States, countless consumers who thought they had secured tickets to Taylor Swift’s Eras Tour shows were the victims of fraud. In New Jersey, a Taylor Swift fan lost almost $2,000 in an e-ticketing fraud scheme.

Why is fraud so prevalent in this industry?

Fraudsters target high-value items

Fraudsters love to go after high-value items, and tickets are no exception. As ticket prices climb, so does the likelihood that the ticket isn’t real: Nearly 25% of tickets priced at more than $200 are fake. And the customers who end up holding these fake tickets find themselves out hundreds of dollars and frustrated.

Fraud increases as events draw closer

Ticket sales follow the laws of supply and demand: As an event gets closer, enthusiasm for the event increases and tickets become scarcer. That means customers are willing to pay premium prices so they don’t miss out, and they’re also all too eager to transfer money to unknown ticket sellers and click suspicious links just to get their hands on a ticket for a must-attend event.

The secondary market is becoming more popular

Because the secondary market — where original buyers go to resell their tickets — is unregulated, it’s filled with fraudsters, counterfeit tickets and even used tickets. Fraudsters are using automated bots to buy large quantities of in-demand tickets and then reselling them on these markets at exorbitant prices.

The average listing for “Hamilton” tickets on StubHub, for example, was $700 more than the $172 face value. As a result, the show raised its top ticket prices to $849 a seat in 2016 to combat the estimated $60 million yearly the show was losing to secondhand resellers.

It’s easy to fake tickets

Somewhere between 3% and 20% of tickets on the secondary market are fraudulent. Scammers create fake barcodes, sell and send the same photocopied ticket (or ticket link) to dozens of would-be attendees, or send ticket links that are simply phishing scams. Some fraudsters receive ticket payments via nondisputable methods like PayPal Friends and Family or Zelle and send nothing in return.

How Can the Ticketing Industry Minimize Online Fraud Risk and Chargeback Exposure?

Fraud prevention is difficult in the e-ticketing industry because of the factors mentioned, plus the immediate nature of the transactions. Even if an e-ticketer wanted to add a contextual review for suspicious orders, consumers of this industry aren’t patient enough to tolerate it.

But there are ways companies can prevent fraud.

Improve the online experience

Simplify the purchasing process on your website with these tips to reduce customer frustration and potential friendly fraud and/or chargebacks.

Send customers an email confirmation for their purchases that includes the terms of the purchase.
Ensure that cancellation and return policies are clearly stated.
Send updates — especially when tickets won’t be sent for a period of time — so customers know what’s happening every step of the way.

Implement security measures

E-ticketing companies can prevent fraud a number of ways, including:

Use two-factor authentication, where customers must input a code sent via SMS or email to confirm their identity.
For credit card purchases, requiring card verification values (CVV) is also a good idea. These three- or four-digit codes increase the likelihood that the customer has the physical card in hand, not just the number.
Implement dynamic QR codes and NFC technology on digital tickets to enhance security and deter counterfeiting.

Rethink your verified fan registration system

The Ticketmaster Verified Fan system typically has a 95% success rate for tackling ticket-buying fraud bots. It allows customers to create a verified account where they must prove their identity through an email address and phone number. Once approved, they receive a unique code to use in purchasing tickets during specially designated times.

Unfortunately, this is the system that broke down during the Taylor Swift ticketing fiasco heard ‘round the world, which means Ticketmaster and other online ticket sellers will need to rethink how they structure their system and how they communicate each level within their Verified Fan system.

Offer refunds

Many ticket resellers are willing to refund a buyer’s purchase if their tickets turn out to be fake. Why? Because it’s often far cheaper to offer a refund than pay expensive chargeback fees and penalties. In the wake of the Taylor Swift fiasco, it would make sense for companies like Ticketmaster and reseller StubHub to offer a maximum refund amount so they aren’t having to reimburse overpriced ticket costs.

Make sure customers are on the lookout for fraud

Educate your customers about potential fraud risks and the most current ticket scams. Create a page on your site dedicated to spotting fake tickets. By empowering customers to make informed decisions, you can prevent fraud and chargebacks.

Implement a fraud protection solution

Companies offering digital event tickets have to walk a thin line: Protect customers from bot attacks and fraud while making sure good customers can actually buy the tickets they want.

Fraud prevention has to be strategic. If you have a tool in place that’s too rigid and blocks the transaction, you might lose the consumer. At the same time, your fraud prevention tools and strategies can’t hinder the customer experience by asking too many questions or waiting too long to make a decision.

How ClearSale Helps E-Ticketers Fight Fraud

At ClearSale, our hybrid solution delivers the most comprehensive fraud and chargeback prevention solutions on the market. They start with an AI-enabled algorithm that leverages trends, intelligence and data gathered from decades of fighting fraud in the most high-risk regions of the world. Using this technology, we can automatically approve most orders quickly.

Suspicious orders are flagged for contextual secondary reviews performed by our more than 2,000 fraud analysts who have the experience to recognize some of the hardest-to-spot fraud patterns. If necessary, our analysts may reach out to customers, but they do so in a way that demonstrates why consumers can trust your business to protect their information.

We then leverage the data gathered from those contextual reviews to help our system better distinguish valid transactions from fraud. That means our system can more easily recognize “good” transactions as we process more for the client, which increases their approval rates and revenue.

This last step in the process helps distinguish friendly fraud. Not only do we offer pre-authorization, but our analysts also encode descriptors to assist in data mining and identifying what a good transaction for the specific client looks like and, inversely, what a “bad” transaction looks like. Once these patterns are identified, they inform how rules are adjusted in the system and aid in the better automated processing of orders.

We also offer end-to-end chargeback management.

Total Chargeback Protection allows businesses to recoup a portion of losses due to fraudulent transactions.
Chargeback Guarantee reimburses the transaction amount plus the chargeback amount for any unauthorized transaction that’s approved.
End-to-End Chargeback Management delivers comprehensive chargeback mitigation and resolution services, including team training, data audits and timely responses to issuers.

ClearSale’s solution offers near-instant decisions on transactions, freeing e-ticketers from having to make split-second decisions themselves. Contact one of our analysts today to see how we can help you minimize your online fraud risk and give you the peace of mind that your business is covered.