Header, the Administration of the Honorable Lincoln C. Almond
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July 7, 1997

TO THE HONORABLE, SPEAKER OF THE HOUSE OF REPRESENTATIVES:

In accordance with the provisions of R.I. Gen. Laws § 43-1-4, I am transmitting herewith, with my disapproval, 97-H 6134, Substitute A\2, "An Act Relating to Businesses and Professions Shows and Exhibitions."

This Act, entitled the "Ticket Scalping Act," would allow ticket brokers registered with the Secretary of State to charge an unlimited amount above the printed box office ticket price for entertainment events. Under current law, the maximum allowable surcharge added to the face value of any ticket is the greater often percent of the ticket price or three dollars. This Act would also require ticket brokers to maintain a consumer protection rebate fund of $25,000, at least $2,500 of which would be available for immediate disbursement to satisfy consumer complaints.

Last year, I vetoed legislation which would also have allowed speculators to resell tickets to entertainment events at an unlimited price in excess of the printed box office ticket price. I vetoed that legislation because, among other things, it did not provide adequate safeguards to protect consumers and because the method of state regulation proposed by the legislation was inappropriate and ineffectual. While improved over last year's efforts, this Act shares the same critical flaws.

Like last year's legislation, the Act contains little real consumer protection. First, although it implies comprehensive state regulation, it rests that responsibility with the Office of the Secretary of State a general office without any statutory authority to regulate business. A requirement that scalpers "register" with the Secretary of State should not be confused with their regulation by the State. The current law protects the public from unscrupulous scalpers selling tickets at unfair prices and in fact makes violation a criminal misdemeanor. There are no criminal penalties associated with the new law and the mere act of registering with the Secretary of State's Office will not and cannot afford protection from such practices.

Second, the Act requires that ticket brokers maintain a consumer protection fund. That fund is so small that its protections are all but illusory. The Act only requires that ticket brokers maintain $25,000 to satisfy consumer complaints, and of that only ten percent or $2,500 is required to be in cash for immediate disbursement. This amount is totally inadequate. A single canceled concert would immediately drain the available cash and, likely, the entire fund. Illinois legislation, upon which this Act is closely modeled, offers substantially greater consumer protection. Instead of a $25,000 consumer protection fund with $2,500 cash on hand, the Illinois legislation requires ticket brokers to maintain a $100,000 fund with $50,000 cash on hand. An earlier version of this bill likewise provided identical protection. That protection unacceptably vanished in the bill which passed.

The Illinois legislation also requires ticket sales to be the principal business activity at the broker's place of business, as did the earlier version of this Acf The Act now, however, allows ticket brokers to engage in unlimited other business at the location where tickets are resold. This will only encourage businesses which do not and cannot dedicate all of their resources and attention to the resale of tickets and the satisfaction the consumers who purchase those tickets. Equally important is the absence in the legislation of a mandate that the broker provide a full refund of the purchase price in case of a canceled event. Without such a provision, consumers could pay far more than the face value of a ticket, yet receive only face value in the event of cancellation.

By omitting real regulatory oversight, allowing ticket brokers to operate unlimited other business, gutting consumer protection fund requirements and forgetting a full-refund provision, the present Act would serve to assist the very fly-by-night scalping operations which leave consumers stranded. Proper ticket resale legislation would address these significant problems.

I would consider supporting legislation which gives at least the level of consumer protection supplied by Illinois and which also places the responsibility for overseeing ticket resale in the appropriate state regulatory agency - the Department of Business Regulation. Further, such legislation should contain a maximum allowable markup and a one-year sunset provision to allow the citizens of this State to be able, on a trial basis, to weigh the pros and cons of allowing markups on the resale of tickets.

For the foregoing reasons, I disapprove this legislation and respectfully urge your support of this veto.


Sincerely,

Lincoln Almond
Governor