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      in Movies

      MoviePass Deceived Users So They’d Use It Less, F.T.C. Says

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      Federal regulators detailed tactics the company, which settled accusations against it, used to try to make its most active users go to the movies less.MoviePass, the failed subscription service that promised unlimited moviegoing for $9.95 a month, agreed on Monday to settle Federal Trade Commission accusations that it knowingly deceived customers, making the service difficult to use, and exposed their personal data.In the process, the F.T.C. revealed the elaborate obstacles that MoviePass executives made the most active users overcome, including forcing them to reset their passwords and setting unannounced limits on their accounts.The proposed settlement bars MoviePass’s parent company, Helios and Matheson Analytics, and its top executives, Mitchell Lowe and Theodore Farnsworth, from misrepresenting their business and data security practices. Any businesses controlled by them must also use information security programs.“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,” Daniel Kaufman, the F.T.C.’s acting director of the Bureau of Consumer Protection, said in a statement.Those “great lengths,” as detailed in the F.T.C.’s complaint, revealed that top MoviePass executives were not only aware of efforts to keep users from going to the movies, but led the execution of schemes they knew to be deceptive.The service, which began in 2011, attracted more than three million subscribers after it offered a deal in 2017 that seemed too good to be true: unlimited movies in theaters for $9.95 a month, or less than the cost of a single ticket in many locations. Its marketing materials said it was good for “any movie, any theater, any day,” including “all major movies” and “all major theaters.”The company hoped that by subsidizing full-price tickets for millions of users, it could negotiate bulk prices from theaters and find other ways to make money from its users. That never happened, and executives, looking to cut costs, focused on trying to make its most active users less active, according to the F.T.C. complaint.In one effort, the company invalidated the passwords of the 75,000 subscribers who used the service most often, while falsely claiming “we have detected suspicious activity or potential fraud” on their accounts, the F.T.C. said. Many of the people who tried to reset their passwords were unable to because of technical problems; the app would not accept their email address, they would not receive a password-reset email, or the email would link to a nonworking website, the F.T.C. said.When users complained, customer service would take weeks to respond, the F.T.C. said. About half of the users successfully changed their password within a week, the F.T.C. said.When an executive warned that the practice would catch the attention of federal regulators and state attorneys general, Mr. Lowe responded in writing “OK I get it,” suggesting the company try it with “2 percent of our highest volume users,” the F.T.C. said..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-1dg6kl4{margin-top:5px;margin-bottom:15px;}#masthead-bar-one{display:none;}#masthead-bar-one{display:none;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-1rh1sk1{margin:0 auto;overflow:hidden;}.css-1rh1sk1 strong{font-weight:700;}.css-1rh1sk1 em{font-style:italic;}.css-1rh1sk1 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#ccd9e3;text-decoration-color:#ccd9e3;}.css-1rh1sk1 a:visited{color:#333;-webkit-text-decoration-color:#ccc;text-decoration-color:#ccc;}.css-1rh1sk1 a:hover{-webkit-text-decoration:none;text-decoration:none;}In a separate effort, the company required the 20 percent of subscribers who used the service most often, about 450,000 people, to submit photos of their physical movie tickets for approval through the app, telling them they had been “randomly selected” for the program, the F.T.C. said. Those who failed to properly submit the tickets more than once would have their accounts canceled, the F.T.C. said.The automated verification system often did not work on common mobile operating systems, and the software failed to recognize many user-submitted photos, the F.T.C. said. The program blocked thousands of people from using the service, the F.T.C. said.Mr. Lowe personally chose how many people would be required to submit photos, the F.T.C. said.In a third effort described by the commission, the company created a “trip wire” by imposing a limit on how often certain users could use the service, but did not disclose the limit in its advertising or terms of use. The company grouped subscribers based on how often they used the service, then, once the group hit an unannounced limit, the people in the group would be unable to use the service, regulators said. The users often did not know they had been cut off until they arrived at the theater, expecting to use their subscriptions, they said.The trip wire was typically set on users who went to more than three movies per month, the F.T.C. said. Mr. Lowe set the thresholds, it said.In addition, a data breach in 2019, which was previously reported, exposed the personal and financial information, including credit card numbers, of more than 28,000 customers, the F.T.C. said.After three million people signed up — many more than executives had expected — the company perpetually struggled to bring in enough cash to offset costs. In April 2018, the company disclosed to regulators that it had been losing about $20 million a month for several months. In July 2018, it borrowed $5 million after it said it could not pay its bills and experienced a service interruption, but the company insisted its service remained stable.In August of that year, MoviePass limited users to three movies a month from a rotating list of films. In January 2019, it increased prices and installed new leadership, promoting Khalid Itum from executive vice president.All the while, customer complaints piled up, and analysts were skeptical the business could continue. They were right: The company shut down in September 2019.It was always a nuisance for theater operators, who thought the low price set by MoviePass would devalue their product.“In AMC’s view, that price level is unsustainable and only sets up consumers for ultimate disappointment down the road if or when the product can no longer be fulfilled,” the theater chain said in 2017 when MoviePass announced its $10 monthly rate. More

    • 88 Shares169 Views

      in Television

      Netflix Tests a Clampdown on Password Sharing

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      AdvertisementContinue reading the main storySupported byContinue reading the main storyNetflix Tests a Clampdown on Password SharingThe company said a feature was being tested with a limited number of users, a move that might signal a broader crackdown on the common practice of password sharing among family and friends.Netflix has been asking some users of the popular streaming service to verify that they live with the holder of the account.Credit…Jenny Kane/Associated PressMarch 14, 2021Updated 11:43 a.m. ETWant to watch “The Queen’s Gambit” or “Lupin”? If you’ve been borrowing a Netflix password from a family member or friend, you may now have to pay up.Netflix has started testing a feature that could prod users who are borrowing a password from someone outside their household to buy a subscription.The company said the feature was being tested with a limited number of users. It may signal a broader clampdown on the common practice of sharing passwords among relatives and friends to avoid paying for the popular streaming service.“The test is designed to help ensure that people using Netflix accounts are authorized to do so,” the company said in a statement.Some users began to notice the feature recently when they logged onto a shared Netflix account and saw a message on their screen that read, “If you don’t live with the owner of this account, you need your own account to keep watching.”To continue watching, these users were asked to either verify that it was their account by entering a code that was sent to them by text or email, or join with their own account to Netflix. They also had the option to complete the verification process later.A basic Netflix subscription, which allows customers to watch on one screen at a time, costs $8.99 a month. Customers who pay more can watch on additional screens simultaneously.Netflix declined to discuss its new feature, previously reported by The Streamable, an industry news site, in detail. But industry analysts said it might be part of an effort to enforce Netflix’s frequently overlooked terms of use, which state that its service and content “are for your personal and noncommercial use only and may not be shared with individuals beyond your household.”The test also appears to be more of a nudge to buy a subscription than an iron-fisted crackdown. For example, someone who was borrowing a password from a friend or family member could ask for the verification code that had been sent by Netflix.“I’m not convinced this is an all-out assault,” said Michael D. Smith, a professor of information technology and marketing at Carnegie Mellon University in Pittsburgh. “It could be a warning shot over the bow of some pirates.”But, he said, merely reminding people that password sharing is not allowed could persuade some people to buy subscriptions, rather than continue to use the ones that are paid for by their friends or relatives.“Even minor signals that piracy isn’t acceptable could change people’s behavior,” he said.The test comes as Netflix viewership has drastically risen during the coronavirus pandemic.The company said in January that it had added 8.5 million customers in the fourth quarter, for a total of 203.6 million paying subscribers by the end of 2020. The company has about 66 million customers in the United States and anticipated adding six million total subscribers in the first three months of this year.Netflix had earlier hinted that it was looking at ways to stop password sharing. Gregory K. Peters, the company’s chief product officer, said during a call to review the company’s earnings in October 2019 that Netflix was “looking at the situation.”“We’ll see, again, those consumer-friendly ways to push on the edges of that,” Mr. Peters said, adding that the company had “no big plans to announce at this point.”Professor Smith said the company clearly loses a significant amount of revenue through people using the service but not paying for it.“Sharing your password is piracy, and it could be costing Netflix a good deal of money if people who would otherwise subscribe are using their friends’ passwords, so that’s no doubt a problem,” he said. “The real challenge for them is finding who the password sharers and who the legitimate accounts are.”Beyond the business concerns, requiring users to enter a code that is texted or emailed could also have security benefits, said Lorrie Faith Cranor, a professor of computer science and engineering and public policy at Carnegie Mellon.Hackers could in theory change the settings of a customer’s Netflix account and start charging the person more, she said. They could also gain access to information that could help them break into other accounts, especially if the customer uses the same password for multiple accounts. “That’s a very common thing,” she said.But requiring a user to enter a code that is sent via text or email — a process known as two-factor authentication that is used by many social media and banking apps — makes it harder for attackers to break in.“I’m not sure it’s a huge benefit,” Professor Cranor said, “but there is some benefit.”AdvertisementContinue reading the main story More