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Supreme Court ruling stifles FTC effort to penalize MoviePass for data mismanagement and user throttling

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The FTC and MoviePass settled a dispute[1] over the company's business practices and data security this week, with the company facing few consequences for a wide variety of offenses alleged by the commission in a 13-page complaint[2]

MoviePass[3] -- a controversial subscription app that allowed people to see one movie per day for a monthly fee of $9.95 -- had a tumultuous run since its founding in 2011. At its peak, the company had more than three million subscribers.

Before long, the people behind MoviePass realized they would not be able to bulk purchase tickets or make up costs in other ways, instead pivoting to making the app more difficult to navigate for people using it multiple times each month. They told regulators in 2018 that they were losing $20 million per month[4]. The app was shut down in 2019 and the company declared bankruptcy in 2020.

Daniel Kaufman, the FTC's Acting Director of the Bureau of Consumer Protection, said 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.

In the complaint, the FTC criticized MoviePass and its leaders for intentionally invalidating subscriber passwords in order to stop people from using the app too often each month. The MoviePass team repeatedly lied to users that they discovered "suspicious activity or potential fraud" and had to shut down accounts that were viewing many films each month. They did this to more than 75,000 users. 

The company also created a ticket verification program for about 450,000 high-volume users as a way to purposefully limit their usage. The verification system had significant problems but, like the first issue, operators at the company used the system

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