Food delivery giant Zomato has made its foray into the ticketing industry. In August, the company bought out two Paytm subsidiaries that housed its movie and sports ticketing businesses for a staggering ₹2,048 crore.
No sooner was the buyout was finalised, than Zomato rolled out a fresh new feature for the ticketing platform dubbed “book now, sell anytime”, which now allows users to sell their tickets on the app if their plans change.
Users now have the option to list their ticket on the Zomato app at their chosen price if they decide to sell their ticket, Zeenah Vilcassim, the CEO of Zomato’s Live Entertainment business said in blog post. The sale prices will be capped at a certain price at the organiser’s discretion, she added.
The upper ceiling is likely to be fixed at twice the current phase price, some reports said.
The Problem With “Buy Now, Sell Anytime”: While the feature serves as a comfortable option in case of change of plants, it brings a larger problem into light: the problem of black marketing. Users are likely to hoard tickets and sell them later at a higher price to pocket a few extra bucks.
Therefore, Zomato has limited the sale of tickets to 10 per category for all users. But in a country where organised scams and rackets are a dime a dozen, is this enough?
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Benzinga India sat down with legal experts to understand the potential implication and issues expected to arise in the business.
Yash Kumar, managing counsel at Spark Legal, believes that reselling tickets would not attract legal attention as tickets to movies and sports would not be considered vital commodities.
“The basic concept of black marketing involves creation of an artificial supply crunch, leading to an increase in the price of a good or service. While central laws exist in India for the prevention of black marketing and hoarding, they are generally centred around “essential commodities”, which does not capture tickets to an entertainment-based event in its purview,” Kumar said.
Although there are no specific measures that prohibits the resale of tickets for events or entertainment by the consumers, laws like The Consumer Protection Act, 2019, protect consumers from unfair trade practices, misleading advertisements, and exploitation of consumers, noted Shashank Agarwal, advocate at Delhi High Court.
Kumar explained that ticket scalping is a global practice, where tickets for popular events are resold at significantly higher prices. While several countries have introduced laws to monitor the practice, India is yet to directly regulate such activities at a nation-wide level, he added.
However, states like Rajasthan and Tripura prohibit the resale of tickets. Kumar says that it will be interesting to see how Zomato navigates such state-specific regulations.
Alay Razvi, partner at Accord Juris says that capping resale prices at twice the original cost could trigger a butterfly effect, increasing speculative buying and driving up prices in the secondary market.
However, Kunal Sharma, partner at Singhania & Co thinks the cap is aimed at reducing predatory pricing by limiting excessive markups on resold tickets. The effectiveness of this cap will depend on its implementation and enforcement, Sharma adds.
All four legal professionals that Benzinga India spoke to agree that limiting ticket purchases to 10 may not be an apt measure to mitigate misuse. “Limited ticket purchases to 10 per person is not a good start to begin with. This leads to using of proxies or having multiple accounts to bypass the limit,” Alay Razvi says.
The professionals suggest that Zomato must employ additional checks and balances to prevent misuse. Sharma suggests that a more effective approach could be the introduction of know-your-customer protocols to verify buyers and prevent bulk purchases by fraudulent entities.
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