There’s the age-old adage that if something seems to be too good to be true, it probably is. According to a settlement deal revealed by the FTC on Monday, MoviePass didn’t innocently suffer from rampant technical glitches; they caused the glitches in a deliberate attempt to prevent subscribers from using the service.
The once-celebrated movie subscription service blew the doors off the exhibition industry when it announced its plan allowing for customers to see a movie every day for just $9.95 a month. As a result, millions signed up for the service. Meanwhile, the company quickly began to drown in red ink.
MoviePass hoped to turn the profitability corner by having subscribers underutilize the service, along with striking deals with theaters to share concession sales. Neither came to fruition. Worse, nearly ever major movie theater chain rolled out their own subscription service, such as AMC’s Stubs A-List program, thus cannibalizing MoviePass’s business model.
In an attempt to stay solvent, the FTC alleges that MoviePass engaged in numerous nefarious acts to prevent its customers from seeing movies.
MoviePass invalidated the passwords of some 75,000 users, falsely claiming it had detected fraud related to their accounts. For those locked out, “MoviePass’s password reset process often failed.”
MoviePass also launched a ticket verification program that allegedly didn’t work properly on purpose. As a result, it “blocked thousands of subscribers from using the service.”
Lastly, and most egregiously, “MoviePass’s operators used ‘trip wires’ that blocked certain groups of users—typically those who viewed more than three movies per month—from utilizing the service after they collectively hit certain thresholds based on their monthly cost to the company.”
MoviePass shuttered for good in 2019. Its parent company, Helios and Matheson, filed for Chapter 7 bankruptcy on January 28, 2020, announcing plans to close permanently.