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The operators of the MoviePass subscription service have agreed to resolve the Federal Trade Commission’s allegations of fraud and data security breaches.
It is alleged that MoviePass used an elaborate three-pronged approach to prevent and discourage subscribers from using its monthly “one movie per day” subscription service at $ 9.95 as advertised.
First, according to the FTC complaint, the company has blocked up to 75,000 subscribers from accessing the content by deliberately invalidating their passwords.
The FTC said: “MoviePass operators have invalidated subscriber passwords while falsely claiming to have detected” suspicious activity or potential fraud “on accounts. MoviePass operators have done so even though some of the its own leaders have raised questions about the scheme. “
Their next alleged tactic was to create an urgent ticket verification program that discouraged thousands of subscribers from using the service.
“This program required subscribers to take and submit photos of their physical movie ticket stubs for approval through the MoviePass app within a certain time frame,” the FTC said.
“Subscribers who did not submit their tickets would not be able to see future films and could have their subscriptions canceled if they did not check their tickets more than once.”
Finally, the operators of MoviePass would have defined “triggers” to prevent groups of subscribers from using the service after having collectively reached certain thresholds based on their monthly cost to the company. The FTC alleges this tactic was used against subscribers who typically watched three or more movies per month.
The operators of the now defunct application have also been accused of storing personal information collected from subscribers in clear text and of allowing unlimited access to names, e-mail addresses, dates of birth, card numbers. customer credit and geolocation information.
In August 2019, MoviePass confirmed that it suffered a data breach that may have exposed customers’ credit card numbers.
MoviePass Inc., founded in 2011 and based in New York City, closed its mobile ticketing service in 2019. In January 2020, its parent company Helios and Matheson Analytics, Inc. filed for bankruptcy.
Under the proposed settlement, MoviePass, Helios, former MoviePass CEO Mitchell Lowe and former Helios CEO Theodore Farnsworth will not be able to distort their business and data security practices.
The ordinance also states that all companies controlled by MoviePass, Helios or Lowe must implement comprehensive information security programs.
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