Website Says All Its 'Profits' Will Be Donated; AG Asks What That Really Means

NEW YORK (CBSNewYork) — A Hurricane Sandy benefit concert featuring a star-studded lineup is set for next Wednesday.

However, concert organizers became concerned this week that the money raised by ticket sales may be winding up in the wrong pockets.

But now, New York Attorney General Eric Schneiderman is ramping up the pressure on StubHub, the popular website where fans are able to purchase and sell tickets for concerts and sporting events.

The “12-12-12” benefit show is being put on by the Robin Hood Foundation and every cent raised is designed to go to Superstorm Sandy victims, including the fee Ticketmaster usually collects.

However, Schneiderman’s office is now calling on StubHub to make clear to consumers how the purchasing of tickets will benefit charities.

Of particular concern to Schneiderman is the wording that StubHub will “donate 100 percent of the profits from this event to the Robin Hood Relief Fund.”

In a letter to StubHub, Jason Lilien, the Charities Bureau Chief at the A.G.’s office, said buyers should know if what StubHub really means by the term “profits” is specifically “the selling commission (15 percent) and the buyer’s service fee (up to 10 percent).”

“Ticket purchasers using StubHub may believe that the resale ticket price they are paying on StubHub — often well above the face value of the ticket — is going to the Robin Hood Relief Fund,” the letter read.

Schneiderman said he joined others in “appreciating the widespread efforts to raise funds desperately needed for Hurricane Sandy’s victims.” However, he stressed “transparency cannot be sacrificed in the name of good.”

Schneiderman said the website needs to “give the public the clear information it needs to determine how ticket purchases will help the relief effort.”

“It is particularly important that you make clear to the public that the “profits” StubHub is donating to charity do not include the difference between the price paid on StubHub and the face value of tickets, unless clearly indicated otherwise,” Lilien said in his letter to StubHub.

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