The operators of MoviePass have agreed to settle with the Federal Trade Commission (FTC) over allegations that they blocked subscribers from using the service while also not securing users’ personal data, according to a press release.
“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,” said FTC Acting Director of the Bureau of Consumer Protection Daniel Kaufman in the release. “The FTC will continue working to protect consumers from deception and to ensure that businesses deliver on their promises.”
With the new agreement, MoviePass, its parent Helios and Matheson Analytics and principals Mitchell Lowe and Theodore Farnsworth will be banned from misrepresenting the business or the business practices, according to the release. In addition, any company controlled by MoviePass, Helios or Lowe will have to put into place comprehensive security practices.
The complaint from the FTC said MoviePass had marketed itself deceptively, touting a “one movie per day” service but not living up to that promise, the release stated. MoviePass instead invalidated subscriber passwords with dubious claims of suspicious activity and launched a ticket verification program to discourage the use of its services, with those who failed to use the program being banned from other movies.
And MoviePass operators used “trip wires” blocking some users after they hit a certain threshold of use based on how much they cost to the company every month, according to the release.
MoviePass operators also failed to take the necessary steps to make personal information safe. The release stated that names, email addresses, birth dates, credit card numbers and geolocation information were stored without any restrictions on who could access it.
Last year, PYMNTS reported that MoviePass filed for bankruptcy, following the shutting down of the service in September 2019. The filing meant both MoviePass and its parent company would be sold with the funds distributed to creditors.