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114th Congress    }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                     {      114-733

======================================================================



 
                BETTER ON-LINE TICKET SALES ACT OF 2016

                                _______
                                

 September 9, 2016.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

  Mr. Upton, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 5104]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 5104) to prohibit, as an unfair and deceptive 
act or practice in commerce, the sale or use of certain 
software to circumvent control measures used by Internet ticket 
sellers to ensure equitable consumer access to tickets for any 
given event, and for other purposes, having considered the 
same, reports favorably thereon with an amendment and 
recommends that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     3
Background and Need for Legislation..............................     3
Hearings.........................................................     5
Committee Consideration..........................................     5
Committee Votes..................................................     5
Committee Oversight Findings.....................................     7
Statement of General Performance Goals and Objectives............     7
New Budget Authority, Entitlement Authority, and Tax Expenditures     7
Earmark, Limited Tax Benefits, and Limited Tariff Benefits.......     7
Committee Cost Estimate..........................................     7
Congressional Budget Office Estimate.............................     7
Federal Mandates Statement.......................................     8
Duplication of Federal Programs..................................     8
Disclosure of Directed Rule Makings..............................     8
Advisory Committee Statement.....................................     8
Applicability to Legislative Branch..............................     8
Section-by-Section Analysis of the Legislation...................     8
Changes in Existing Law Made by the Bill, as Reported............     9
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Better On-line Ticket Sales Act of 
2016'' or the ``BOTS Act''.

SEC. 2. UNFAIR AND DECEPTIVE ACTS AND PRACTICES RELATING TO USE OF 
                    TICKET ACCESS CIRCUMVENTION SOFTWARE.

  (a) Sale of Software.--It shall be unlawful for any person to sell or 
offer to sell, in commerce, any computer software, or part thereof, 
that--
          (1) is primarily designed or produced for the purpose of 
        circumventing a technological measure that limits purchases 
        made via a computerized event ticketing system;
          (2) has only limited commercially significant purpose or use 
        other than to circumvent a technological measure that limits 
        purchases made via a computerized event ticketing system; or
          (3) is marketed by that person for use in circumventing a 
        technological measure that limits purchases made via a 
        computerized event ticketing system.
  (b) Use of Software.--It shall be unlawful for any person to use any 
computer software, or part thereof, described in subsection (a) of this 
section, to purchase an event ticket via a computerized event ticketing 
system in violation of the system operator's posted limits on the 
sequence or number of transactions, frequency of transactions, or 
quantity of tickets purchased by a single user of the system, or on the 
geographic location of any transactions.
  (c) Resale of Tickets.--It shall be unlawful for any person to engage 
in the practice of reselling in commerce, event tickets acquired in 
violation of subsection (b) of this section if the person either--
          (1) participated directly in or had the ability to control 
        the conduct in violation of subsection (b); or
          (2) knew or should have known that the event tickets were 
        acquired in violation of subsection (b).
  (d) Definitions.--As used in this section--
          (1) the term ``computerized event ticketing system'' means a 
        system of selling event tickets, in commerce, via an online 
        interactive computer system that effectively limits the 
        sequence or number of ticket purchase transactions, frequency 
        of ticket purchase transactions, quantity of tickets purchased, 
        or geographic location of any ticket purchase transactions;
          (2) the term ``event ticket'' means a ticket entitling one or 
        more individuals to attend, in person, one or more events to 
        occur on specific dates, times, and geographic locations; and
          (3) to ``circumvent a technological measure'' means to avoid, 
        bypass, remove, deactivate, or impair a technological measure, 
        without the authority of the computerized event ticketing 
        system operator.
  (e) Rule of Construction.--Notwithstanding the prohibitions set forth 
in subsections (a) and (b), it shall not be unlawful under this section 
to create or use any computer software, or part thereof, to--
          (1) investigate or further the enforcement or defense of any 
        alleged violation of this section; or
          (2) engage in research necessary to identify and analyze 
        flaws and vulnerabilities of a computerized event ticketing 
        system, if these research activities are conducted to advance 
        the state of knowledge in the field of computer system security 
        or to assist in the development of computer security products.
  (f) Enforcement by the Federal Trade Commission.--A violation of 
subsection (a), (b), or (c) shall be treated as an unfair and deceptive 
act or practice in violation of a regulation issued under section 
18(a)(1)(B) of the Federal Trade Commission Act (15 U.S.C. 
57a(a)(1)(B)).
  (g) Enforcement by States.--
          (1) Authorization.--Subject to paragraph (2), in any case in 
        which the attorney general of a State has reason to believe 
        that an interest of the residents of the State has been or is 
        threatened or adversely affected by a violation of subsection 
        (a), (b), or (c), the attorney general of the State may, as 
        parens patriae, bring a civil action on behalf of the residents 
        of the State in an appropriate district court of the United 
        States to obtain appropriate relief.
          (2) Rights of federal trade commission.--
                  (A) Notice to ftc.--
                          (i) In general.--Except as provided in clause 
                        (iii), the attorney general of a State shall 
                        notify the Federal Trade Commission in writing 
                        that the attorney general intends to bring a 
                        civil action under paragraph (1) before 
                        initiating the civil action against a person 
                        for a violation of subsection (a), (b), or (c).
                          (ii) Contents.--The notification required by 
                        clause (i) with respect to a civil action shall 
                        include a copy of the complaint to be filed to 
                        initiate the civil action.
                          (iii) Exception.--If it is not feasible for 
                        the attorney general of a State to provide the 
                        notification required by clause (i) before 
                        initiating a civil action under paragraph (1), 
                        the attorney general shall notify the 
                        Commission immediately upon instituting the 
                        civil action.
                  (B) Intervention by the ftc.--The Federal Trade 
                Commission may--
                          (i) intervene in any civil action brought by 
                        the attorney general of a State under paragraph 
                        (1); and
                          (ii) upon intervening, be heard on all 
                        matters arising in the civil action, and file 
                        petitions for appeal of a decision in the civil 
                        action.
          (3) Pending action by the federal trade commission.--If the 
        Federal Trade Commission institutes a civil action or an 
        administrative action with respect to a violation of subsection 
        (a), (b), or (c), the attorney general of a State may not, 
        during the pendency of such action, bring a civil action under 
        paragraph (1) against any defendant named in the complaint of 
        the Commission for the violation with respect to which the 
        Commission instituted such action.

                          PURPOSE AND SUMMARY

    The purpose of the Better On-line Ticket Sales (BOTS) Act 
of 2016 (H.R. 5104) is to prevent any person from selling or 
using software that circumvents the safeguards event ticket 
sellers put in place to ensure equitable access to tickets.
    H.R. 5104 would prohibit the sale or use of any computer 
software that (1) is primarily designed to circumvent measures 
to limit event ticket purchases, (2) has only limited 
commercial purposes aside from such circumvention, or (3) is 
marketed for use in such circumvention. The legislation also 
prohibits the purchase of any event ticket in violation of the 
ticket seller's posted ticket sale limits. Finally, H.R. 5104 
prohibits the resale of tickets purchased initially in 
violation of H.R. 5104, where the reseller knew or should have 
known that the tickets were acquired in violation of H.R. 5104 
or where the reseller participated directly in or had the 
ability to control such acquisition.
    H.R. 5104 contains a rule of construction clarifying that 
the prohibitions in the legislation do not render 
investigations of a violation of H.R. 5104 or certain research 
activities unlawful.
    The Federal Trade Commission (FTC) is the primary enforcer 
of H.R. 5104. Subject to certain restraints outlined in the 
legislation, a State attorney general may also enforce the 
provisions of H.R. 5104 if the State attorney general has 
reason to believe that an interest of the residents of the 
State has been threatened or adversely affected by a violation 
of H.R. 5104. State attorneys general would be required to 
notify the FTC in writing when they bring civil actions under 
the statute, unless it is infeasible to do so, and are 
precluded from State enforcement actions during the pendency of 
an FTC enforcement action involving the same violation and a 
common defendant.

                  BACKGROUND AND NEED FOR LEGISLATION

    The market for live event tickets has encountered 
challenges from ticket brokers who use software to circumvent 
the safeguards primary ticket sellers use to limit ticket 
purchases. This software is commonly referred to as ``ticket 
bots.'' Ticket bots perform different functions, but generally 
operate by (1) automatically and continuously checking ticket 
seller websites for ticket releases; (2) automatically 
reserving and displaying available tickets for the human 
operator; (3) automatically buying tickets using as many names, 
addresses, and credit card numbers as necessary to appear to be 
individual ticket buyers; and (4) defeating anti-ticket bot 
security measures such as Completely Automated Public Turing 
(CAPTCHA) tests.\1\
---------------------------------------------------------------------------
    \1\Eric T. Schneidermann, New York State Attorney Gen., Obstructed 
View: What's Blocking New Yorkers From Getting Tickets 15-16 (Jan. 
2016), available at http://www.ag.ny.gov/pdfs/Ticket_Sales_Report.pdf 
[New York Study].
---------------------------------------------------------------------------
    In many cases, primary ticket sellers limit purchases by 
buyers. For example, ticket sellers often make tickets 
available to the general public on a set date and time\2\ and 
may limit the number of tickets to four or six per purchasing 
party.\3\ These measures are to ensure that ticket buyers have 
an equitable chance of acquiring tickets to the live event, 
which are necessarily finite in number. Ticket sellers also 
generally prohibit the use of automated software to purchase 
bulk tickets, which would defeat the technical safeguards to 
ticket purchase limitations. For example, Ticketmaster 
prohibits the ``[u]se of any automated software or computer 
system to search for, reserve, buy or otherwise obtain tickets 
. . . available on the Site. . . .''\4\
---------------------------------------------------------------------------
    \2\Letter from William M. Rubenstein, Commissioner of Consumer 
Protection, State of Connecticut, to Hon. Paul Doyle, State Senator, 
Co-Chair, General Law Committee, State of Connecticut, et al. 4 (Feb. 
22, 2012), available at http://www.ct.gov/dcp/lib/dcp/pdf/publications/
final_ticket_letter.pdf (``The date on which tickets will be available 
to all members of the public is known as the ``public on-sale date.'') 
[Connecticut Report].
    \3\Legislative Hearing on 17 FTC Bills Before the Subcomm. on 
Commerce, Manufacturing, and Trade of the H. Comm. on Energy and 
Commerce, 114th Cong. 2 (2016) (statement of Gil Genn, Maryland Sports 
& Entertainment Industry Coalition) (``. . . for most live 
entertainment events there is a restriction on the number of seats one 
purchaser can buy--usually between 4 and 8 tickets.'') [Genn 
Testimony].
    \4\Ticketmaster, Terms of Use, http://www.ticketmaster.com/h/
terms.html (last visited Aug. 17, 2016).
---------------------------------------------------------------------------
    Ticket brokers' use of ticket bots has frustrated the 
intentions of performers\5\ and other ticket sellers\6\ to make 
tickets available equitably and at reasonable prices. Primary 
ticket sellers have estimated that 60 percent of the most 
desirable tickets for some shows are obtained by ticket 
bots.\7\ Ticket bots have also enabled brokers to purchase and 
then sell large swaths of event tickets on the secondary market 
at exorbitant prices. One study finds that, on average, brokers 
mark up the price of tickets on the secondary market by 49 
percent of the primary ticket seller's price.\8\ The ability to 
buy massive amounts of tickets against primary ticket sellers' 
terms and technical controls, however, has enabled them to mark 
up the price by over 1,000 percent.\9\
---------------------------------------------------------------------------
    \5\See, e.g., Lin-Manuel Miranda, ``Stop the Bots From Killing 
Broadway,'' N.Y. Times (June 7, 2016), available at http://
www.nytimes.com/2016/06/07/opinion/stop-the-bots-from-killing-
broadway.html; Patrick Doyle, ``Eric Church on Scalpers, Bro-Country 
and Blake Shelton Scandal,'' Rolling Stone (June 11, 2014), available 
at http://www.rollingstone.com/music/news/eric-church-on-scalpers-bro-
country-andblake-shelton-scandal-20140611.
    \6\Genn Testimony, at 2 (``It is unfair to the younger fans who 
have discovered these legends to have to pay exorbitant prices to 
secondary ticket sellers when they are also concerned about their first 
job salary, saving for college or even paying-off student loans, and 
real-life expenses.'').
    \7\Ben Sisario, ``Concert Industry Struggles With `Bots' That 
Siphon Off Tickets,'' N.Y. Times (May 26, 2013), available at http://
www.nytimes.com/2013/05/27/business/media/bots-that-siphon-off-tickets-
frustrate-concert-promoters.html.
    \8\New York Study at 4.
    \9\Id.
---------------------------------------------------------------------------
    Several States have enacted laws to combat ticket bots.\10\ 
In addition, New York and Connecticut have each conducted 
reports of the market for event tickets in those States.\11\ 
These reports focus more broadly on the ticket market as a 
whole, but include some data on ticket bots. H.R. 5104 would 
encourage the FTC to put its resources toward combating the 
problem of ticket bots and provide an enforcement tool for 
States by authorizing State attorneys general to enforce the 
Federal statute.
---------------------------------------------------------------------------
    \10\Shawntaye Hopkins, Blame it on the Bots: States Act to Ban 
Ticket-Buying Software, The Current State (Council of State Gov'ts), 
Jul.-Aug. 2016 available at http://www.csg.org/pubs/capitolideas/enews/
cs53_1.aspx (``about a dozen states have laws that ban ticket bots. . . 
.'').
    \11\See New York Study; Connecticut Report.
---------------------------------------------------------------------------

                                HEARINGS

    The Subcommittee on Commerce, Manufacturing, and Trade held 
a hearing on H.R. 5104, along with several other bills, on May 
24, 2016. The Subcommittee received testimony from:
           Edith Ramirez, Chairwoman, Federal Trade 
        Commission;
           Joshua D. Wright, University Professor, 
        Antonin Scalia Law School at George Mason University;
           Geoffrey Manne, Founder and Executive 
        Director, International Center for Law and Economics;
           Daniel Castro, Vice President, Information 
        Technology and Innovation Foundation;
           Abigail Slater, General Counsel, Internet 
        Association;
           Michael Best, Senior Policy Advocate, 
        Consumer Federation of America;
           David Vladeck, Professor of Law, Georgetown 
        Law;
           Richard Hendrickson, President and CEO, 
        Lifetime Products;
           Greg O'Shanick, President and Medical 
        Director, Center for Neurorehabilitation Services;
           Stephen Shur, President, Travel Technology 
        Association;
           Robert Arrington, President, National 
        Funeral Directors Association;
           John Breyault, Vice President of Public 
        Policy, Telecommunications and Fraud, National 
        Consumers League;
           Gil Genn, Maryland Sports and Entertainment 
        Industry Coalition; and
           Jamie Pena, Vice President, Revenue Strategy 
        and Global Distribution, Omni Hotels and Resorts.

                        COMMITTEE CONSIDERATION

    On June 8 and 9, 2016, the Subcommittee on Commerce, 
Manufacturing, and Trade met in open markup session and 
forwarded H.R. 5104, as amended, to the full Committee by a 
voice vote. On July 12, 13, and 14, 2016, the full Committee on 
Energy and Commerce met in open markup session and ordered H.R. 
5104 reported to the House by a voice vote.

                            COMMITTEE VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. No 
other recorded votes were requested. The following reflects the 
record votes taken during the Committee consideration:


                      COMMITTEE OVERSIGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held a hearing and made 
findings that are reflected in this report.

         STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

    The goal of H.R. 5104 is to prevent any person from selling 
or using software that circumvents the safeguards event ticket 
sellers put in place to ensure equitable access to tickets.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
5104 would result in no new or increased budget authority, 
entitlement authority, or tax expenditures or revenues.

       EARMARK, LIMITED TAX BENEFITS, AND LIMITED TARIFF BENEFITS

    In compliance with clause 9(e), 9(f), and 9(g) of rule XXI 
of the Rules of the House of Representatives, the Committee 
finds that H.R. 5104 contains no earmarks, limited tax 
benefits, or limited tariff benefits.

                        COMMITTEE COST ESTIMATE

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  CONGRESSIONAL BUDGET OFFICE ESTIMATE

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, September 9, 2016.
Hon. Fred Upton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5104, the Better 
On-line Ticket Sales Act of 2016.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Stephen 
Rabent.
            Sincerely,
                                            Mark P. Hadley,
                                        (For Keith Hall, Director).
    Enclosure.

H.R. 5104--Better On-line Ticket Sales Act of 2016

    H.R. 5104 would prohibit the sale or use of software that 
circumvents technology used by ticket sellers to prevent mass 
ticket purchases online. The bill also would prohibit the 
resale of tickets obtained in that manner. The Federal Trade 
Commission (FTC) would enforce the proposed prohibition.
    Based on information from the FTC about its current 
enforcement capabilities, CBO estimates that increased costs 
related to monitoring and enforcing the new prohibitions 
established by H.R. 5104 would total less than $500,000 per 
year; such spending would be subject to the availability of 
appropriated funds.
    In addition, CBO estimates that enacting H.R. 5104 would 
increase federal revenues from civil penalties imposed to 
enforce the new prohibition; therefore, pay-as-you-go 
procedures apply. However, CBO estimates that those collections 
would be insignificant because of the small number of cases 
that the agency would probably pursue. Enacting the bill would 
not affect direct spending.
    CBO estimates that enacting H.R. 5104 would not increase 
net direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2027.
    H.R. 5104 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Stephen Rabent. 
The estimate was approved by Theresa Gullo, Assistant Director 
for Budget Analysis.

                       FEDERAL MANDATES STATEMENT

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                    DUPLICATION OF FEDERAL PROGRAMS

    No provision of H.R. 5104 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  DISCLOSURE OF DIRECTED RULE MAKINGS

    The Committee estimates that enacting H.R. 5104 
specifically directs to be completed no rulemakings within the 
meaning of 5 U.S.C. 551.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title

    Section 1 provides that the Act may be cited as the 
``Better On-line Ticket Sales Act of 2016'' or the ``BOTS 
Act.''

Section 2. Unfair and deceptive acts and practices relating to use of 
        ticket access circumvention software

    This section makes it unlawful for any person to sell or 
offer to sell software that (1) is primarily designed or 
produced to circumvent technological measures limiting 
purchases made via computerized event ticketing system; (2) has 
only limited commercially significant purpose or use other than 
for such circumvention; or (3) is marketed by a person as 
software intended for such circumvention. The section further 
makes it unlawful to use such software in violation of a ticket 
seller's posted ticket purchasing rules regarding the sequence, 
number, or frequency of transactions, quantity of tickets 
purchased by a single user, or on the geographic location of 
transactions. The section also renders it unlawful for any 
person to sell any ticket that has been obtained by that 
person, or another, using circumvention software, if the 
secondary seller either participated directly or had the 
ability to control the unlawful conduct or knew or should have 
known that the tickets were obtained in violation of the 
section.
    This section further provides a rule of construction 
clarifying that it is not unlawful to use circumvention 
software to investigate or further the enforcement or defense 
of any alleged violation of this section; or engage in research 
necessary to identify and analyze flaws and vulnerabilities. 
This section sets forth that a violation of this Act will be 
treated as an unfair or deceptive act or practice under the 
Federal Trade Commission Act and authorizes State attorneys 
general to enforce its provisions.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    This legislation does not amend any existing Federal 
statute.

                                  [all]