MoviePass tricked users into using it less, says FTC
When an executive warned that the practice would attract the attention of federal regulators and state attorneys general, Mr. Lowe wrote back, “OK, I get it,” suggesting the company try it with “2%. of our largest users, ”the FTC. mentionned.
In a separate effort, the company asked the 20% of subscribers who used the service most often, around 450,000 people, to submit photos of their physical movie tickets for approval through the app, telling them that they had been “randomly selected” for the program. , said the FTC. Those who failed to submit tickets correctly more than once would have their accounts canceled, the FTC said.
The automated verification system often did not work on popular mobile operating systems and the software did not recognize many photos submitted by users, the FTC said. The program has blocked thousands of people from using the service, the FTC said.
Mr. Lowe personally chose the number of people required to submit photos, the FTC said.
In a third effort described by the commission, the company created a “trigger” by placing a limit on how often certain users can use the service, but did not disclose the limit in its advertising or terms of service. . The company grouped subscribers based on how often they used the service, and then, once the group hit an unexpected limit, group members could no longer use the service, regulators said. Users were often unaware they had been cut until they got to the theater, expecting to use up their subscriptions, they said.
The trigger thread was typically set to users who went to more than three movies per month, the FTC said. Mr Lowe set the thresholds, he said.
Additionally, a data breach in 2019, which was Previously reported, exposed the personal and financial information, including credit card numbers, of more than 28,000 customers, the FTC said.
After three million people signed up – far more than executives anticipated – the company perpetually struggled to bring in enough money to offset the costs. In April 2018, the company revealed to regulators that it had been losing around $ 20 million per month for several months. In July 2018, he borrowed $ 5 million after stating that it could not pay its bills and suffered a disruption in service, the company insisted its service remained stable.