MoviePass Deliberately Misled Its Customers, Says The FTC

The executives behind the failed theater ticket subscription company MoviePass have reached a settlement with the Federal Trade Commission, following charges that they misled customers and failed to protect its user's data.

As reported by Variety, the FTC ruled against Helios and Matheson Analytics, the company which owned MoviePass, CEO Mitch Lowe, and Chairman Ted Farnsworth. It stated that they will be "barred from misrepresenting their business and data security practices." In addition, any other businesses they own must "implement comprehensive information security programs."

The FTC's ruling comes nearly two years after MoviePass closed down. The service launched in 2017 and enabled subscribers to book tickets for one film a day for an incredible $10 per month. Unsurprisingly, the company quickly ran into financial issues, and regularly changed its policies as it tried to manage cashflow. MoviePass eventually wound down in September 2019.

The FTC has now revealed that many of the technical issues that affected its heaviest users were a deliberate attempt to limit how many tickets they bought via the service. These included invalidating passwords while warning of "suspicious activity" on the account, and then making it impossible to reset passwords, and employing an undisclosed "trip wire" facility that blocked users that were perceived to be using the service too often.

There was also the controversial ticket-verification program that required selected users to submit pictures of their ticket stubs to continue to use the service. While MoviePass claimed at the time this was a random process, it has been revealed that it was again targeted at heavy users in an attempt to make them use the service less.

In addition, the FTC stated that MoviePass filed to properly protect the personal data it had collected from its members. Email addresses and financial information were not not secured properly, and there were insufficient restrictions on who could access this information.

In a statement, Daniel Kaufman, acting director of the FTC's Bureau of Consumer Protection, said, "MoviePass and its executives went to great lengths to deny consumers access to the service they paid for while also failing to secure their personal information. The FTC will continue working to protect consumers from deception and to ensure that businesses deliver on their promises."