COVID-19: Vivid Seats Hit with Class Action Over Alleged Refusal to Issue Refunds

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Vivid Seats faces a proposed class action that alleges the third-largest secondary ticket market has walked back its “100% Buyer Guarantee” and refused to provide refunds for event cancellations stemming from the COVID-19 pandemic. 

The 37-page complaint against Vivid Seats Ltd. and Vivid Seats LLC alleges the companies’ efforts to “retroactively discontinue” their longstanding 100-percent money-back assurance is an attempt to force consumers to shoulder the financial fallout from the “entirely foreseeable” scenario that world occurrences may force the simultaneous cancellation of numerous public events. 

The defendants’ refusal to issue refunds amounts to a breach of contract between Vivid Seats and buyers, as well as unjust enrichment, negligent misrepresentation and violations of state consumer protection laws, the lawsuit alleges.  

As the case tells it, the core of Vivid Seats’ business model, which allows ticket sellers to connect with buyers, creates the potential for disaster should event cancellations happen en masse. According to the suit, Vivid Seats immediately pays ticket brokers, who typically buy large quantities of tickets to sell on the secondary market, as soon as the tickets are delivered to buyers instead of waiting until the event occurs. By paying ticket brokers immediately for their sales, Vivid Seats ensures that their liquidity is freed up in order to allow the brokers to buy more tickets to sell on the site, a cycle that continues “on and on,” the lawsuit says. 

Where trouble arises, the suit explains, is that more cancellations equates to more money Vivid Seats must shell out in order to cover consumers in search of refunds, money that the defendants have already paid to sellers. From the complaint: 

“The problem here is apparent to any thinking person. If Vivid Seats has already paid the seller for the tickets, but the event still has not occurred, it will have to come up with the money on its own if it needs to honor the 100% Buyer Guarantee in the event of a cancellation. The more cancellations that occur, the more money Vivid Seats needs to come up with. 

Astonishingly, Vivid Seats either did not see the problem with this business model - or it was too busy making money to care. But eventually, as it became clear that many events would be canceled and around the same time it attempted to revoke its guarantees to buyers, Vivid Seats unilaterally changed its seller policy to make payment only after the event had occurred.”

As the novel coronavirus crisis made it apparent that large public gatherings would not be taking place in the near future, Vivid Seats, for the first time, introduced the option that buyers could choose to receive a 120-percent credit in lieu of a cash refund, the lawsuit says. This shift, and the introduction of a “Rewards Cash loyalty credit,” was no more than a quiet about-face from the defendants’ 100-percent buyer guarantee, the lawsuit alleges. More from the suit:

“Disgracefully, Vivid seats quietly added an additional requirement for any customers who wish a cash refund instead of a ‘Rewards Cash loyalty credit.’ Customers who wish a refund must now contact the customer service team within 7 days of the event’s cancellation or else their claim to a cash refund is purportedly extinguished. Previously, a full cash refund was the default.”

The plaintiffs ask the court to order Vivid Seats to reverse its alleged retroactive refund policy changes, cease issuing “loyalty credits” in lieu of refunds to those who have not requested such vouchers and pay other damages to proposed class members. 

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