The Federal Trade Commission (FTC) has launched a lawsuit against the ticket reseller Key Investment Group (KIG), accusing it and its affiliates of using illegal tactics to bypass purchase limits and engage in large-scale ticket scalping.
The complaint filed Monday, Aug. 18 in the U.S. District Court for the District of Maryland said KIG allegedly violated the Better Online Ticket Sales Act (BOTS Act) through a sophisticated scheme that generated an estimated $64 million in secondary market sales revenue.
Loopholes, Fake Accounts, Sim Banks
The FTC alleges KIG exploited loopholes and leveraged technology, using fake accounts and virtual credit cards to obtain thousands of tickets to popular shows, including Taylor Swift’s Eras Tour and Bruce Springsteen. The defendants then resold the tickets for substantial profits, the complaint said.
The defendants are accused of using thousands of virtual and traditional credit card numbers to avoid detection by Ticketmaster’s fraud prevention systems. They also employed proxy services and spoofed IP addresses to hide their true locations and circumvent geographic purchase restrictions.
The operation also used “SIM banks,” according to the FTC, devices housing dozens of SIM cards to automatically receive and process the verification codes Ticketmaster sends to verify legitimate fan accounts.
Another part of the alleged scheme involved using friends, family and paid strangers to open Ticketmaster accounts.
The defendants purchased approximately 379,776 tickets from Ticketmaster between November 2022 and December 2023 at a cost of nearly $57 million, then resold a portion of them on secondary platforms for $64 million, according to the complaint.
For a Bruce Springsteen show at MetLife Stadium on Sept. 1, 2023, the FTC alleges the defendants used 277 different accounts to purchase 1,530 tickets, far exceeding Springsteen and the E Street Band’s four-ticket limit. The defendants reportedly then marked up and resold the tickets for a net profit of $20,901.
Across 38 Taylor Swift concerts between March and August 2023, the brokers purchased 2,280 tickets for a total of $744,970 and resold them for $1,961,981, generating over $1.2 million in profit, according to court documents.
In summation, the court documents allege that Ticketmaster’s built-in protections were bypassed by KIG and its associates by:
◾using thousands of Ticketmaster accounts to purchase tickets, including fictitious and third-party accounts that the defendants purchased;
◾utilizing thousands of virtual and traditional credit card numbers;
◾hiding their identity by using proxy or spoofed IP addresses;
◾using SIM boxes to facilitate the receipt of verification codes sent to the phone numbers associated with the thousands of fake and third-party accounts they used to purchase tickets.
By September 2018, Ticketmaster had identified over 3,100 active and fictitious accounts controlled by Key Investment Group, with the company ultimately creating or obtaining more than 13,000 accounts, the complaint indicates.
KIG Denounces Complaint
KIG denies the allegations and said in a statement on Monday, Aug. 18 that it is “prepared to vigorously defend itself against this clear example of regulatory overreach.”
The company said it disputes the FTC’s interpretation of the BOTS Act, and believes the lawsuit could harm the secondary market.
“In an unprecedented move, the FTC has twisted the intent of the Better Online Ticket Sales (BOTS) Act, a law designed to target malicious software, into a weapon against legitimate businesses and consumers. Under the FTC’s interpretation, anyone who purchases more than four tickets or uses more than one account could be deemed in violation of federal law,” KIG said.
“Even more troubling, the FTC misleadingly characterizes KIG’s use of standard internet browsers to purchase tickets as equivalent to deploying unlawful software. This portrayal is both deceptive and malicious,” the company said.
The complaint names KIG and the businesses it operates under — Epic Seats, TotalTickets.com LLC, and Totally Tix LLC — as well as KIG CEO Yair D. Rozmaryn, CFO Elan N. Rozmaryn, and Chief Strategic Officer Taylor Kurth.
The BOTS Act
The BOTS Act was passed in 2016 and specifically prohibits circumventing security measures used by ticket sellers to enforce purchase limits and makes it illegal to sell tickets obtained through such violations. It targets the practice of automated ticket purchasing and reselling using “bots” or other automated ticket purchasing practices.
The FTC brought its first BOTS Act enforcement actions against three ticket brokers in 2021 on charges they used automated software to purchase live event tickets. Violations of the Act are punishable by civil penalties up to $53,088 per violation.
The three ticket brokers — Cartisim Corp. and Simon Ebrani; Just In Time Tickets, Inc. and Evan Kohanian; and Concert Specials, Inc. and Steven Ebrani — were required to pay a total of over $3.7 million in civil penalties. While the initial judgment against them was for over $31 million, a portion was suspended due to their inability to pay.
