On Monday, the Federal Trade Commission charged the executives of the long-defunct MoviePass app over allegations that they fraudulently blocked customers from using the service as advertised while failing to protect their data privacy. The FTC also announced that it had reached a settlement with MoviePass and its executives as a result of the investigation. The Verge reports: Under the proposed settlement, MoviePass, its parent company Helios and Matheson Analytics, its CEO Mitch Lowe, and chairman Ted Farnsworth are forbidden from falsely representing their business and data security practices to customers. Any businesses controlled by these entities are also required to roll out comprehensive information security programs to protect consumers. “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, FTC acting director of the Bureau of Consumer Protection said in a statement Monday. “The FTC will continue working to protect consumers from deception and to ensure that businesses deliver on their promises.”
The FTC’s complaint accuses the company of deceptively marketing its “one movie per day” service to subscribers and barring customers from using the service as advertised. It also alleges that the company falsely invalidated customer passwords over “suspicious activity or potential fraud” in order to ban frequent moviegoers from the service. The FTC also says that MoviePass initiated a ticket verification program as a means of discouraging people from using the service. As part of the settlement, MoviePass’ operators must put comprehensive data security programs into place in any future ventures after saving MoviePass customer data in plain text, the FTC said.