On 24 January 2022 and seemingly still harbouring a grudge from being suspended as chief whip by PM David Cameron nearly a decade ago for appearing on I’m a Celebrity, the Culture Secretary, Nadine Dorries, light-heartedly tweeted picture of Cameron wearing a baseball cap and a lumberjack shirt at Cocklebarrow Races, with the caption: “Whether it’s a major music festival, sporting event or concert, it’s important that people pay a fair price to see the events they love. Please remain vigilant when considering to buy from ticket touts. Guidance is available if you are unsure.” The image can be found here.
This comes as a timely reminder that the law is closing in on ticket touts!
Ticket touting is “the practice whereby individuals or companies acquire tickets… and then seek to resell them, usually at a substantial premium”. This industry is dominated by professional touts who deploy various techniques to harvest tickets in substantial numbers and resell them. Musicians including Ed Sheeran have taken an aggressive stance on this practice in recent years and decided to clamp down on touts in 2018 after seeing seats for a Teenage Cancer Trust charity concert being resold online for obscenely-high prices. Football clubs and rugby venues have taken a similar stance, having opted to pursue civil High Court injunctions to stop touts.
On 26th November 2021, the Court of Appeal dismissed an appeal against conviction brought by two touts and the Court’s approach is such that it may well have a major impact on the “secondary ticketing” industry by providing a clear path for prosecution. The judgment may result in the increase of criminal prosecutions being brought against ticket touts by Trading Standards, local councils and even private organisations, such as sports clubs and music venues.
Criminal Offences for Ticket Touting
In 2020, Messrs Hunter and Smith were prosecuted and convicted for offences contrary to:
- Fraudulent Trading, contrary to section 933(1) of the Companies Act 2006, which makes it an offence where a company’s business is carried on for any fraudulent purpose, for a person to be to party to the carrying on of the business in that manner; and
- Section 6(1) of the Fraud Act 2006 which makes it an offence to be in possession or control of an article for use in fraud.
Hunter and Smith relied upon use of ticket touting as a business method to generate lucrative profits.
Generally, organisers of popular sporting, music and cultural events will impose contractual restrictions to limit the amount of tickets an individual can purchase and prohibiting resale. The purpose being to prevent ticket touting. Whilst some organisers will sell tickets themselves, they often rely on use of agents to sell the tickets on a primary ticketing website in line with these restrictions. The aim is to stop the ‘harvesting’ of tickets – where technology is used to allow an individual to purchase several tickets with the intention of resale, thus forcing others to purchase tickets from a secondary ticketing website (“STW”). Touts use bots to make multiple purchases using false names and addresses within seconds on primary ticketing websites. The ticket vendor (human or machine) is led to believe that the transactions are from genuine individuals who will abide by the ticket restrictions.
This allows ticket touts to list tickets for sale on STWs for significantly more than their face value. STWs do not act as the vendor for the tickets but provide a platform for ticket touts to find individuals willing to purchase the tickets.
The Prosecution – the scope of section 933 of the Companies Act 2006
The prosecution case was that Hunter and Smith carried on the business of BZZ Ltd and the business of the company that was carried on included a fraudulent purpose.
There was no dispute over the modus operandi of the business. Hunter and Smith instead focused their defence on its effect – arguing that their business system was neither dishonest or fraudulent and that no one was deceived, and no one was harmed – there were no victims. They argued that they had used friends and family’s credit cards to purchase tickets with their permission (they were found with 112 payment cards in their possession) yet, somehow, there was no intent to deceive the vendors. Further, as their contracts were with the STWs (rather than end users) and as the STWs were aware of and supported their practices, there was no intention to deceive and/or no harm to any proprietary interest of any victim. On this basis, they argued that there was no evidence of actual prejudice or risk of actual prejudice to the economic interests of another – this principle being argued as flowing from the principles in conspiracy to defraud and from the judgment in R v Evans  1 WLR 2817.
The Court of Appeal’s ruling is one of the most extensive reviews for some time of the scope of the offence of fraudulent trading.
The Court of Appeal [Macur and Green LJJ; Cheema-Grubb J]:
- Expressed reservations with the overly narrow test formulated by Mr. Justice Hickinbottom in R v Evans – namely that a conspiracy to defraud could only be proven if the jury found the defendants agreed dishonestly to prejudice another’s proprietary right or interests;
- Did not agree that the parameters of the common law of conspiracy to defraud applied to section 993 in any event, which on its terms is not so limited. A s.993 offence could be prosecuted if the Jury were sure that the business was carried on ‘for any other fraudulent purpose’. The court found this test to be very wide, the reason being that “The ingenuity of business fraudsters knows few bound”;
- Rejected the notion that Hunter and Smith’s contracts were with the STW and not the end user and by failing to warn consumers of the risks attached to purchasing touted tickets, Hunter and Smith had misled customers and were in breach of the Consumer Protection from Unfair Trading Regulations 2008. This was on the basis had consumers known that the tickets they were purchasing may become void, as indeed happened, it is likely that they would have been far more reluctant to pay inflated prices; and
- Identified a variant of circumstances where defendants: (i) use duplicitous/deceptive conduct (which might amount to a breach of contract and/or breach of statutory duty); (ii) persuade counterparties to act in ways that they would not if they were informed of the truth; and (iii), thereby make significant profits they would not otherwise have made had they acted in a candid, frank and lawful manner. All of this amounted to a fraudulent purpose.
The judgment has paved the way for the enforcement of ticket restrictions via the criminal law, which will add to the available options available to deter ticket touts in future.
In 2019, Chelsea Football Club commenced expensive civil proceedings against numerous touts operating around the stadium. Civil injunctions were obtained preventing touts from congregating near the ground on match days and deploying under-cover teams to catch touts in the act. The club gave a statement referring to the known links with organised crime. It is possible that there will now be an increase in (public) prosecutions by Trading Standards or (private prosecutions) by venues, sports teams, or possibly musicians themselves who may use the criminal law to prosecute touts, to protect their fans. Ultimately, this judgment is a positive step towards greater protection for consumers.
Ashley Fairbrother & Yasmin Hassan
 R v Peter Hunter & David Thomas Smith  EWCA Crim 1785,  11 WLUK 384 at 
 R v Peter Hunter & David Thomas Smith  EWCA Crim 1785