After over 500 complaints, Washington State Attorney General sues Brown Paper Tickets
Last month, Washington state Attorney General Bob Ferguson filed a lawsuit against Seattle-based Brown Paper Tickets(BPT), accusing the company of failing to pay event organizers and not refunding consumers for tickets they purchased.
The 10-year-old company, which offers low-cost ticketing services to event organizers and acts as an intermediary between event organizers and ticket buyers, is accused of engaging in unfair and deceptive acts that violated Washington’s Consumer Protection Act according to the lawsuit, filed in King County Superior Court.
Last March, we began reporting that Brown Paper Tickets weren’t paying funds owed to dozens of event organizers that included schools, performers, and theatre companies. To make matters worse, BPT representatives weren’t able to answer questions of how those funds disappeared. When the number of questions increased, along with the missing funds, BPT turned off their phone customer service and replied with prepared statement emails.
What we didn’t know was how widespread the issue with BTP’s business practice actually was. AG Ferguson asserts that the company owes organizers approximately $6 million and ticket buyers $760,000 nationwide. He said his office has received 583 complaints from consumers about the company’s conduct and around 80,000 people have been affected.
The question of how this could have happened is a mystery at this point. According to an official of another third-party ticket selling company I spoke with, BPT losing these funds should never have happened as long as they were being honest with how those funds were being collected and used.
According to their agreement with event holders - open collecting ticket revenue, BPT would charge $.99 per ticket plus a 5% fee. So when customers purchase a $10 ticket to a school play, there is an additional fee of $.99 + 5% of the cost of the ticket. Those fees go directly to BPT for their services. Those are the only funds that are to be collected by BPT from the raised revenue. The rest is sent to the event holder typically within 7-10 business days.
And this is where the issue lies. BPT first sent checks that were bouncing, then had no explanation of how that money went missing and didn’t have a timetable available when people could expect their funds. Some who hosted their events back in January and February, before COVID-19 shutdowns, still have yet to be paid.
According to my source, problems like this could typically arise if BPT was doing a couple of things:
The first is if they were using proceeds raised from events, beyond their contracted fees, to pay the salaries of their own employees and other business expenses.
The other is if BPT were using proceeds raised by one event to pay out another. For instance, $1,000 raised for a school play could be paid out to a theatre company as an installment for $10,000 they’re owed. And then $1,000 raised from a charity event would be paid to the school for their play.
We don’t know for sure what caused the failure at BPT but AG Ferguson’s investigation will find that out.
Sadly that doesn’t help the thousands of customers who have been cheated out of funds they raised and desperately need. We’ve already seen the casualties of BPT’s mismanagement. The Pisgah Film House in NC had to close due to the fact that funds raised were never paid out from BPT. In Alaska, a production company, Erickson Unlimited, is still waiting on over $200,000 that BPT hasn’t paid a dime on.
Surprisingly or not, leaders at BPT have been nearly silent on the issue. They haven’t responded for comment from OnStage Blog nor any other publication that’s reached out for one. What they have done is release ambiguous statements every month or so. Like this one on September 14th from BPT founder and CTO William Scott Jordan.
Thank you for your interest in Brown Paper Ticket’s COVID-19 recovery efforts and your continued patience. We committed to improved communications and we recognize that it has been a while since many of you have heard from us.
We continue to work through the backlog of refund requests. While we can’t offer an estimated timeline for your specific refund at this moment, our team has been and continues to initiate full refunds to ticket holders (including BPT service fees) and pay event organizers on a daily basis. We continue to examine our processes to identify opportunities to safeguard customers moving forward.
It’s a long process with thousands of events canceled, postponed, or abandoned. Like many businesses, we were unprepared for a crisis of this scale, but we are making headway.
We understand that for many of you, your patience is wearing thin. We appreciate your continued understanding as we work to process refunds. We look forward to our continued partnership with the arts communities that count on us.
What makes statements like these infuriating for customers is that it doesn’t explain how the problems began. But thankfully, through AG Ferguson’s lawsuit and a class-action lawsuit filed by customers, Jordan and others at BPT will have to answers those questions very soon.