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Tackling Ticketing Fraud: Blockchain Potential

Ticketing fraud has long plagued the industry, forcing true fans to pay extortionate prices, while posing security threats for event organisers.

With the rapid development of technology in the last decade, ticketing ‘bots’ have caused chaos, enabling online touts to buy tickets en masse and sell them on secondary markets at a high profit margin.

Marc Mazzariol, Vice-President of product development at ticketing solutions provider SecuTix, emphasises that the ticketing industry as an all-encompassing entity needs a complete overhaul to try to prevent such fraud.

Unless action is taken, he claims, people will ultimately lose trust in the industry.

There are signs that the authorities are beginning to listen to the concerns of spectators, performers and event organisers.

I’m just frustrated with the way the industry is dealing with fraud at the moment

Unlimited fines for touts who use computer software to snap up concert tickets is one suggestion by the UK’s Department for Culture, Media and Sport, as part of a wider crackdown to bring the secondary market under greater control.

In an effort to combat scalpers, Mazzariol says that regulations should be adaptable to the changing digital landscape. “I’m just frustrated with the way the industry is dealing with fraud at the moment” Mazzariol said. “We really need to see a bigger change – yes, things are moving forward in the legal aspect of it, but there’s still so much to be done internally.”

In 2015, there was a 55- per- cent rise in ticket fraud year-on-year, according to the City of London Police’s National Fraud Intelligence Bureau and Get Safe Online.

“Fraud is creating a global loss of trust in the industry. It’s not one or two organisations anymore, it’s a worldwide problem,” Mazzariol said.

Fraud is becoming prevalent for highly sought after events, mostly due to bots.

“Bots are disrupting the contact between event organisers and their final customers who are attending the events, thus breaking the relationship between the two, which is a real problem for the industry,” Mazzariol said.

Mazzariol said that he recognises that bots will always be present in attempting to take tickets away from real fans, but he emphasised that the industry needs to make it harder for these professional, fraudulent companies to do so.

The lack of exchange protocol in the industry also encourages fraud on the secondary market

“When a ticket is resold on the secondary market, it does not end up with the same person it was sold to in the first place and therefore, event organisers do not know exactly who is at their events,” Mazzariol said. “This is due to the fact that tickets are issued in a format that is not suitable for exchanges on the secondary market. Not only you cannot change the name of the ticket holder, but also you cannot control how many times it will change hands.

“Customers expect that organisers will do security checks on every person, but when tickets get resold and end up in the hands of a different person, this becomes a daunting task for organisers to run identity checks for each ticket holder. It is expected of an organiser to know exactly who is attending, even in a 80,000-seat stadium”

Mazzariol recommends changing the definition of what a ticket is: “As long it is an email, a PDF or a barcode image that you can share and make copies of, fraud will remain prevalent – we need to adapt and move to a new art of digital tickets with identity checks and exchange rules in place.”

The SecuTix executive said that there are emerging technologies to combat the problems surrounding ticketing fraud.

One technology the industry is beginning to look into to combat ticketing fraud is the use of Blockchain, a distributed database that maintains a continuously-growing list of transactions grouped in so called blocks. Each block contains a timestamp and a link to a previous block secured with encryption technics. Also, each recorded transaction needs to respect a digital “Smart Contract” that defines the market regulation rules. So, in effect, Blockchain is a decentralised digital ledger that validates and records transactions on thousands of computers globally, and such transactions cannot be altered retrospectively.

Essentially, it will allow organisers to identify who holds a ticket, while also providing customers with the confidence that they will buy and resell valid tickets at a fair price.

“At SecuTix, we are leveraging Blockchain, merging it with mobile and access control to create a technologically responsive m-ticket that you cannot copy or transmit without following certain guidelines and rules. It allows the organiser to know who will attend, and will ensure that tickets are resold at a fair price.”

Mazzariol argues that Blockchain creates an opportunity for a dramatic change in the way the ticketing industry deals with fraud.

“We at SecuTix believe that Blockchain is an enabler to mitigating the risk of fraud. I won’t pretend that Blockchain is the ultimate response, as fraudulent professionals will always find a way to react to the technology advances, but it will make things much more complicated for them.

SecuTix will be giving a more detailed presentation on the use of Blockchain in relation to ticketing during our Global Perspectives & Emerging Trends Session on 5 April. Join here.

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