Ticketmaster agrees to pay a $ 10 million fine to resolve fraud and hacking charges

Ticketmaster agreed to pay a $ 10 million fine to settle criminal charges that it repeatedly accessed a rival’s computer systems in an alleged scheme to collect “business intelligence”. Ticketmaster, a subsidiary of Live Nation, mainly sells and distributes tickets for concerts and other events.

The fine is part of a deferred lawsuit settlement filed in Brooklyn federal court on Wednesday, which includes five-count criminal information that accuses Ticketmaster of conspiracy to commit computer intrusion, computer intrusion for commercial advantage, computer hacking to promote fraud, conspiracy electronic fraud and electronic fraud.

Ticker	Safety	Last	change	Change %
LYV	LIVE NATION ENTERTAINMENT	74.57	+0.06	+ 0.08%

Federal prosecutors said on Wednesday that Ticketmaster executives and employees have repeatedly used stolen passwords to illegally access computers belonging to an unidentified rival company in an effort to “stifle” their businesses and attract large customers.

A source familiar with the matter told FOX Business that the rival company involved is Songkick, a startup specializing in pre-sales for artists, where a percentage of tickets were reserved before the general sale of tickets in an effort to reduce scalping. In addition, Songkick offered an Artist Toolbox, a password-protected application that provided real-time data on tickets sold by the company.

According to Reuters, Live Nation acquired Songkick’s technology assets and patent portfolio in 2018 as part of a $ 110 million deal to settle an antitrust suit. The Wall Street Journal reported that Songkick merged with a company called Crowdsurge in 2015 before the acquisition of Live Nation.

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The source identified one of the employees involved in the alleged scheme as Stephen Mead, a former Crowdsurge employee who started working with Live Nation in 2013.

During Mead’s time with Ticketmaster, he shared URLs with Zeeshan Zaidi, the former head of Ticketmaster’s artist services division, and other employees, in order to illegally monitor the ticket web pages created by Crowdsurge. Mead explained to Ticketmaster executives that the “store ID” numbers in the URLs can let the company know which artists plan to use the web pages to sell tickets.

In May 2014, Mead provided a demo to Ticketmaster executives during an Artist Services Summit using login information that he had withheld from his time at Crowdsurge. Mead also provided Zaidi and other Ticketmaster executives with internal and confidential company financial documents.

Around January 2015, Ticketmaster offered Mead a salary increase and promoted him to director of customer relations. Mead began helping Ticketmaster maintain a spreadsheet that listed all the web pages that could be located, which would then be used in an effort to “stop” artists from using Songkick’s services. Ticketmaster employees continued to access password-protected Songkick toolboxes until December 2015.

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A Ticketmaster spokesman told FOX Business that both Mead and Zaidi were closed in 2017 after their conduct came to light.

“Their actions violated our corporate policies and were inconsistent with our values,” added the spokesman. “We are pleased that this matter is resolved.”

Zaidi pleaded guilty in a related case of conspiracy to commit computer intrusions and electronic fraud based on his participation in the same scheme. He has not yet been convicted.

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In addition to paying the fine, Ticketmaster must also report to the United States Attorney’s Office annually during the three-year term of the agreement on new compliance measures, which include maintaining clear policies to detect and prevent unauthorized computer intrusions.

If Ticketmaster breaches the agreement, the company will be prosecuted for hacking and accusations of fraud.