A reader and his friends planned a trip in March to watch a couple of NHL games. They called it off due to COVID-19 and got their money back from their airline and hotel bookings. However, StubHub refused to refund the $700 they had paid for the hockey tickets.
One of our readers, Doug, recently wrote to me regarding a refund dilemma.
He and some friends were supposed to fly to New York in March to watch a couple of professional hockey games. They called off the trip due to COVID-19 and got their money back from their airline and hotel bookings.
However, StubHub refused to refund the $700 they had paid for the hockey tickets.
Part of the problem is that, while the games didn’t take place as scheduled, they weren’t officially canceled, either. The NHL hopes to resume its 2019-20 season at some point. But that feels less likely with each passing day, and even if the season does start back up, it’s even less likely that every game will be made up with fans in the seats.
Nevertheless, the official policy right now is that the games are in limbo.
StubHub’s COVID-19 cancellation policy
When events are canceled due to COVID-19, StubHub says it automatically gives ticket holders a 120% site credit valid through Dec. 31, 2021. When events are rescheduled, StubHub doesn’t give refunds. It suggests that ticket holders either attend on the new date or sell their tickets to someone else.
That’s not a great outcome, but like I said, we’re not even there yet with Doug’s situation. He and other ticket holders are supposed to wait and see. If you were slated to attend a National Hockey League, National Basketball Association or Major League Baseball game over the past couple of months, you’re probably in the same situation.
Since StubHub wasn’t giving him and his friends their money back, Doug filed a chargeback with his credit card company. The company refunded the money, but StubHub banned Doug from its site as a result. This is addressed in the fine print on StubHub’s website:
If you don’t want your tickets and file a dispute, we’ll deactivate your StubHub account.
Your account will stay inactive until you:
- Drop the dispute
- Pay StubHub the amount you owe
This was the point at which Doug reached out to me. He added that he has several ticket sales pending with StubHub. I told him that while I didn’t think it was good customer relations for them to kick him out, I recommended getting back in StubHub’s good graces by dropping the dispute and temporarily repaying the money.
I explained that he will likely get the money back soon (in the form of a 120% site credit) once the NHL officially cancels the games. Since he’s a frequent StubHub user (both buying and selling), I think he has more to lose by being excluded from the marketplace moving forward.
Mass event cancellations expose business model flaw
I contacted StubHub on Doug’s behalf, and a spokeswoman defended the company’s policy. She forwarded me examples of other companies that ban users who dispute transactions, such as Ticketmaster and Sony PlayStation.
Ultimately, this highlights a major flaw in StubHub’s business model.
StubHub president Sukhinder Singh Cassidy told Axios, “We had over 20,000 events canceled, basically at the same time. In addition to our buyers, we also have a million sellers on our platform, all of whom are trying to figure out how they’re going to get recouped from the original seller – the venue, the team, the artist – and the timing delays are going to be significant. In normal times, we would take the risk of giving refunds to buyers before recouping the same refund from the seller.”
If you bought from StubHub, the seller may already have your money
While it’s easy to blame StubHub, they don’t have the money. They’re just the intermediary. They charge fees to sellers (often about 15%) and buyers (roughly 10%), but most of the funds change hands between individuals who use StubHub as a transaction platform.
When he and his friends bought the March game tickets, almost all of their money went to whoever listed the tickets on StubHub (likely Rangers and Islanders season ticket holders who put those particular games up for sale). Doug and his friends want their money back, and these people have it. That’s the potentially fatal flaw in StubHub’s business model.
Hindsight is 20/20, but StubHub shouldn’t have disbursed money until events actually happened. When and if these games are officially canceled by the various leagues, StubHub will need to try to claw money back from the individuals who sold the tickets on its platform. It probably won’t be entirely successful.
Pre-pandemic, this wasn’t that big of a deal, but now that events are being called off en masse, it’s a huge deal. So huge that StubHub is reportedly considering filing for bankruptcy. That’s a shocking fall for a market-leading company that was acquired for $4 billion earlier this year.
Policy change: Too little, too late?
In early April, StubHub was hit with a class-action lawsuit alleging that it retroactively broke its FanProtect guarantee by offering future event credits rather than actual money back. The suit says StubHub’s financial woes were self-inflicted and were caused by its decision to pay sellers before events took place.
StubHub has already changed that policy – it now says sellers can expect payment about a week after the event has been held. Will it be enough to save the company? Only time will tell.
In the meantime, Doug and many others just want their money back.
Have a question about credit cards? Email me at email@example.com and I’d be happy to help.