United States: MoviePass Settles With FTC Regarding Subscriber Usage Limitations

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Key points to remember:

  • Brands must honor the advertised benefits of the products and avoid techniques aimed at blocking the use of the products.
  • Under the Restoring the Confidence of Online Shoppers Act (and the state’s auto-renewal laws), advertisers must disclose terms and conditions and obtain express consent from consumers before debiting a payment card. or an account.

The FTC and MoviePass recently reached a settlement over allegations the company used deceptive tactics to prevent subscribers from using its service and insecurely held subscribers’ private information. The FTC complaint alleged that MoviePass used three tactics, described below, in a perceived attempt to save money on their $ 9.95 per month subscription service which was advertised as offering unlimited access. to some movies in theaters.

Limit the use of subscribers: The FTC has alleged that MoviePass, its parent company Helios and Matheson Analytics, Inc. (Helios), and its directors Mitchell Lowe and Theodore Farnsworth, rushed in the face of strong demand for the subscription service and took action to prevent users from receiving the “one movie per day” they paid to cut costs. The FTC has listed the following deceptive or unfair tactics that MoviePass operators allegedly used to set up roadblocks for consumers:

1) Denial of passwords: MoviePass operators blocked users from logging into their accounts by falsely claiming there was “suspicious activity or potential fraud”. Subscribers could not use their MoviePass account until the operators allowed them to return.

2) Verification program: MoviePass operators have implemented a verification program whereby subscribers were required to submit a photo of their movie tickets within a certain timeframe, or else they would lose access to their account, or even be terminated. disable it. This program has blocked thousands of access to their account.

3) Passionate User “Trip Wires”: MoviePass operators rated their most passionate users and blocked the entire group after they collectively watched a set number of movies. Even if a qualified avid user only watched one movie in a month, they could hypothetically be prevented from watching another if the user group had reached a quota decided by MoviePass.

ROSCA violation: The FTC also alleged that MoviePass operators violated the Restoring the Confidence of Online Buyers Act (ROSCA) which, among other things, requires companies providing subscription services to disclose material terms and receive a material consent before any debit from subscriber payment accounts.

Do not secure the data: The FTC further alleged that MoviePass failed to secure the personal information of its users. Although it has stated in its privacy policy that it takes “reasonable steps to protect personal information,” MoviePass user data has been placed in unencrypted databases. These databases containing user credit card numbers, locations, emails and more have been accessed by unauthorized persons.

A proposed ordinance would require MoviePass to reverse these practices, and compliance will be monitored. Consumers will not receive damages, and MoviePass and Helios have already filed for bankruptcy.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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