CoCo DA’s Office Joins with Three Other Counties To Finalize $400,000 Settlement With MoviePass Affiliated Executives

On May 20, the Contra Costa County District Attorney’s Office, in conjunction with the District Attorneys’ Offices of Ventura, Sonoma, and San Joaquin Counties, entered into a negotiated settlement agreement with former MoviePass affiliated executives, Theodore Farnsworth and Mitchell Lowe, for engaging in numerous unlawful, unfair, and fraudulent business acts and practices, while overseeing the operations of the now defunct movie theater subscription service.

In total, Farnsworth and Lowe will have to pay $400,000 in civil penalties. In addition to the monetary payments, Farnsworth and Lowe are enjoined from engaging in any of the alleged unlawful, unfair, or fraudulent business acts or practices committed during their tenure as MoviePass managers.

MoviePass was an American subscription-based movie ticket service headquarter in New York City. Founded in 2011, the service initially allowed subscribers to purchase up to three movie tickets per month for a discounted monthly fee. The service utilized a mobile phone app where users checked into a theater and chose a movie and showtime, which resulted in the cost of the ticket being loaded by MoviePass to a prepaid MoviePass debit card, which was then used to purchase the ticket from the movie theater.

In 2017, Helios and Matheson Analytics purchased MoviePass. Around the time of the purchase, the business model for MoviePass, shifted from a three movie per month subscription to offering, among other things, an “unlimited” subscription plan at $9.95 a month and an “unlimited” fixed rate annual subscription. However, over the course of the next two years, the business model and terms of service changed multiple times to the detriment of the consumers.

After the acquisition of MoviePass by Helios and Matheson Analytics, the Defendants engaged in numerous unlawful, unfair, and fraudulent acts and practices. These acts and practices include, but are not limited to:

• Falsely advertising that MoviePass subscriptions offer “unlimited” movie watching. Specifically, “any movie”, “any day”, at “any theater”, when in reality MoviePass continually added limitations to customers’ subscriptions.
• Unconscionably changing terms of service during a subscription period.
• Converting all prepaid “unlimited” plans to three movies per month.
• Shutting down the availability of movies when a certain dollar amount is reached. (Trip wire).
• Failing to notify autorenewal customers of material changes to their subscriptions.
• Continuously charging customers’ debit or credit cards after receiving notice of cancellation from customers.

In addition to the above acts and practices, in 2019, MoviePass suffered a data breach.

The data breach was the result of a MoviePass engineer creating an unsecured and unencrypted server as a debugging tool. This server had more than 161 million pieces of personal identifying information, including names, MoviePass card numbers, credit card numbers, billing information, email addresses and login information, belonging to at least 58,000 consumers.

Despite being notified by private individuals, MoviePass allowed this server to operate for three months before it was taken down. MoviePass failed to advise the California Attorney General’s Office of the data breach, as required by law.

MoviePass shut down its operations in September of 2019. Both MoviePass and its parent company, Helios and Matheson Analytics, filed for Chapter 7 bankruptcy in January of 2020.