(Photo: Wikimedia Commons.)

Connecticut-based ticket resale company TicketNetwork has settled a pair of lawsuits, one with state and federal government agencies accusing it of misleading sales tactics and the other with a former co-CEO who claims the company wrongfully terminated him.

TicketNetwork’s subsidiaries and their ownership have agreed to pay $1.4 million to settle the government’s allegations.

The state alleges that through the use of its company websites and terms like “official” tickets, TicketNetwork falsely created the impression for consumers that the online ticket sites were official websites for performance or sporting venues or other entities authorized to sell tickets at face value, when in truth the websites were secondary market sites reselling tickets, often at higher prices.

In addition to South Windsor-based TicketNetwork, the lawsuit filed by government officials included the company’s wholly-owned subsidiary TicketSoftware LLC, and two companies that are part of TicketNetwork’s Partner Program — Ryadd Inc. and SecureBoxOffice LLC. Also named in the complaint are Ryadd co-owners Ryan Bagley and Charles Lineberry and Secure Box Office owner James Moran.

All of the defendants are involved in the secondary ticket market, in which brokers and other businesses advertise and sell event tickets to consumers. In the primary ticket market, consumers buy tickets directly from either a venue box office or from an authorized ticket service. While the primary market typically sells tickets at face value, the secondary market, which operates primarily online, often sells tickets above face value.

Ryadd, for example, placed the following paid Google ad that appeared near the top of the search results page when consumers searched for Radio City Music Hall: “Official Ticket Source Online for Radio City Music Hall Tickets in NY — radiocity.musichall-ny.com.”

The ad conveyed the impression that the website was the official Radio City Music Hall site, according to the complaint. Consumers who clicked on the ad were taken to a website prominently titled “Radio City Music Hall,” which featured photos, text, and other material designed to look like the official Radio City Music Hall website. It was actually a Ryadd site, selling resale tickets, often at a price higher than original face value.

“We pursued this action to bring some needed transparency to secondary ticket market transactions,” said state Consumer Protection Commissioner William Rubenstein. “Armed with accurate information, consumers can make better-informed decisions about whether the resale ticket market provides them with the tickets and services they value at reasonable prices.”

The complaint was lodged in U.S. District Court in Connecticut by the Federal Trade Commission and joined by the state Attorney General’s Office and Department of Consumer Protection. A settlement agreement was filed the same day the lawsuit was filed. The settlement terms are awaiting approval from a judge.

The ticket resellers are prohibited from suggesting, directly or by implication, that their resale websites are affiliated with any venue box office. Specific bans include using the name of theaters, stadiums or other entertainment venues, including partial or alternate spellings in website URL addresses; deceptively using pictures, logos or descriptions of venues; and using the word “official” in phrases such as “official tickets,” “official source,” or “official website” in any online advertising, display URLs, websites, web pages or any other form of advertising for the sale of secondary market tickets.

Further, all of the defendants must disclose, clearly and prominently on the ticket listing page and the payment authorization page of their ticket sale websites that their site is a resale ticket marketplace and not a venue or box office; that the ticket price offered may exceed face value; and that the website is not owned by the venue, team, performer or promoter.

Also as part of the settlement, the defendants agree to requirements regarding record-keeping and ongoing compliance reporting to the state and the FTC.

Ryadd Inc., and co-owners Bagley and Lineberry, must pay $550,000 to the state. SecureBoxOffice LLC and Moran, it’s owner are ordered to pay $100,000 to the state. Lastly, TicketSoftware LLC is ordered to pay $750,000 to the state.

All funds are to be used by the state for complaint resolution programs, consumer education and consumer protection enforcement.

It was no coincidence that the complaint settled between the ticket resale companies and the state and federal government within a day or so of TicketNetwork’s settlement of a lawsuit brought against them by Jeffrey Scheman, a former co-CEO of the company. Scheman’s lawsuit alleged that he was terminated by the company and its CEO and founder Donald Vaccaro for cooperating with the government’s investigation into the matter.

Scheman’s lawyer, Mark Sherman, confirmed the settlement agreement but said the two sides agreed not to disclose the terms. Sherman said his client was “satisfied with the settlement and pleased to have this behind him.”