MoviePass Deceived Customers So They’d Use It Much less, F.T.C. Says

When a senior executive warned that the practice would attract the attention of federal regulators and attorneys general, Mr. Lowe replied in writing, “OK, I see,” suggesting that the company do it with “2 percent of our highest volume users “The FTC. try said.

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In a separate effort, the company required around 450,000 people of the 20 percent of subscribers who used the service most frequently to submit photos of their physical movie tickets for approval through the app and inform them that they were “randomly” selected for the program, said the FTC. Those who failed to properly submit the tickets more than once would void their accounts, the FTC said.

The automated verification system often did not work on popular mobile operating systems, and the software failed to recognize many user-submitted photos, the FTC said. The FTC said the program prevented thousands of people from using the service.

Mr Lowe personally selected how many people were needed to submit photos, the FTC said.

In a third attempt described by the Commission, the company created a “tripwire” by limiting the frequency of use of the service by certain users but not disclosing this in its advertising or terms of use. The company grouped subscribers according to the frequency of use of the service. Once the group hit an unannounced limit, the people in the group would no longer be able to use the service, regulators said. Often times, users didn’t know they were being cut off until they got to the theater and expected to use their subscriptions, they said.

The tripwire was usually placed on users who attended more than three films a month, the FTC said. Mr. Lowe set the thresholds, it said.

In addition, a previously reported data breach in 2019 disclosed the personal and financial information, including credit card numbers, of more than 28,000 customers, the FTC said.

After three million people signed up – a lot more than executives expected – the company was struggling to raise enough cash to offset the cost. In April 2018, the company announced to regulators that it has been losing about $ 20 million a month for several months. In July 2018, it raised $ 5 million after saying it couldn’t pay its bills and experienced a service interruption, but the company insisted that its service remain stable.

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