The operators of the now-defunct MoviePass have reached a settlement with the Federal Trade Commission to resolve concerns that they actively prevented subscribers from using their service and didn’t protect users’ data.
The FTC on Monday announced a proposed deal with MoviePass parent company Helios and Matheson Analytics and their principals, Mitchell Lowe and Theodore Farnsworth. Under it, they’re all barred from “misrepresenting their business and data security practices” and “must implement comprehensive information security programs” in any future corporate endeavors, which will have heavy FTC oversight. As both companies have declared bankruptcy, there’s no monetary penalty being levied.
While MoviePass touted “one movie per day,” the FTC says the company employed three tricks to keep subscribers from actually using the service: They faked “suspicious activity” concerns to invalidate passwords of the 75,000 subscribers who used the service the most, launched a faulty ticket verification program and used “trip wires” to block groups of high-volume viewers once they reached a certain cumulative financial threshold. (Read the full complaint below.)
The FTC also says MoviePass failed to take reasonable steps to secure subscribers’ personal information, including names, addresses, credit card numbers and birth dates.
The commission approved the deal in a 3-1 vote, with Noah Joshua Phillips dissenting. A description of the consent agreement package will be published in the Federal Register, and then it will be open for public comment for 30 days. After that, the commission will decide whether the proposed order becomes final.
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