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MoviePass settles FTC allegations that they limited usage, exposed user data (ftc.gov)
309 points by aarestad 3 months ago | hide | past | favorite | 163 comments



If a private individual did the things set out here they'd be criminally liable. When a company executive orders employees to do these things, they're not facing any criminal complaint at all (any of them). See also Wells Fargo multiple thefts (both fraudulent accounts with fees, and literally entire homes/all possessions).

It is pretty evident that many laws are constructed (e.g. CFAA) wherein there's one rule for individuals and a completely different rule for executives/companies.

I understand that the FTC themselves cannot jail people. I don't understand why the justice department cannot.


In regard to financial institutions getting away with crime, a former SEC commissioner became exasperated that this had become US government policy by 2015:

“the latest series of actions has effectively rendered criminal convictions of financial institutions largely symbolic.”

https://www.sec.gov/news/statement/stein-waivers-granted-dis...


That link is both very damning and very succinctly informative of the problem.


How this isn't a criminal case is beyond me. The dissenting judge is correct: if there is no monetary penalty, what's the point of the judgment?


This is a joke. fraud is fraud. Civil penalties are not a good deterrent


I agree, but they weren't even penalized, so there's zero deterrent. It appears the court took into consideration that the company is bankrupt but failed to see the apparent criminal action taken by the company and CEOs.


This was not a court ruling. The FTC is a regulatory body, not a judicial one. It is up for prosecutors to make a an actual criminal case.


IANAL, but it seems like the AG is still well within their power to press charges and consumers are still free to pursue class action.


What damages could customers seek? Presumably not much more than the cost of the service, which was only around $20/month.


I don't know - I've been part of class actions where the settlement was much, much higher than than the cost to me. So I think it depends.

Hard to see that working here with a completely bankrupt company.


One of the problems is that they were selling $100 for $10. I was a user and got more than my money’s worth out of MoviePass including the months they committed these abuses. However I could have gotten even more value out of them without these moves. How would you even quantify those damages?


Those are the compensatory damages, but punitive damages might be appropriate here on top of those.


I wonder if a general purpose legal framework of applying the same punishment to different types of entities is possible.

That way most laws could be worded in a way that applies to private individuals and all types of companies the same way, but then the actual punishment would be applied differently.

Specifically, when a company breaks the law, the legal framework would explain the way the responsibility should be shared between the legal entity and the private individuals involved in breaking the law.


I am frustrated that we continue to have the death penalty for individuals that commit heinous crimes, but we do not have the death penalty for corporations.

I feel like when you manage to harm a billion people at a time, the penalty should be that your company is dissolved, it's assets auctioned off, and the trademarks and domains blackholed.

And then, since I don't support the death penalty for individuals, the C-levels investigated for their knowing involvement in any related schemes, and if proven aware, given prison time and forbidden from ever operating in a management capacity at any corporation ever again.

The problem with corporations is that there is no meaningful disincentive to commit crimes. You succeed, you get rich. You fail, you take your severance, live like a king for a year, and then get hired to do the same at another company. If executive pay is going to come with outsized pay, it should come with outsize risk: Jail executives for their choices when running corporations. For the millions they make, they'll still be lining up for the job.


I have some complicated feelings on this, because on the one hand it really makes sense to punish these people and companies and stop this behavior from continuing, and on the other it would suck to be some low level worker and have some bullshit from a CEO cause you to immediately lose your job, and it would also suck as a customer of some non-screwy service of the company to have something you rely on forced to stop.

Perhaps a complete replacement of all upper level management over 6 months and possibly a moratorium on board involvement for a time period for board members if it was bad enough would be sufficient? In the "a corporation is a person" analogy that's about the same as some other mind taking over the body, so that might be sufficient. You might have to have some laws that provide some bite for people that want to just jump ship immediately knowing there severance is in danger even if they stay, but it's not like what I'm proposing could happen without new legislation anyway.

As long as the payment of severance was handled by new management explicitly, and all replacements happened under explicit notice that the prior employee was being removed for compliance in an illegal activity (so they could fight against paying the severance), I think that would be a fairly good deterrence of bad behavior, since it would affect both employment of themselves and others, it has a good chance of affecting payouts when fired, and it effectively wipes the slate clean while doing what it can to preserve services and employment for as many as possible.


> to be some low level worker and have some bullshit from a CEO cause you to immediately lose your job

Possibly, but this government action could automatically trigger unemployment benefits (paid for by all the money the government just seized from corporate coffers), the vacuum created would probably quickly be filled by expanding competitors who would hire people from the executed company, and considering the intersection of "companies that commit mass abuses" and "companies that treat their low level employees like garbage", it's likely that the low level employees would come out ahead.

If say, Amazon disappeared today, people's desire for stuff would not disappear, and other companies would have to hire to fill that void. (After probably buying the warehouses and trucks at auction.) Most of those companies don't have employees peeing in bottles.

> Perhaps a complete replacement of all upper level management over 6 months and possibly a moratorium on board involvement for a time period for board members if it was bad enough would be sufficient?

But a huge part of the issue is also regarding public companies, shares, and stock value:

A big issue I have is with founders. Jeff Bezos, Larry Page, Sergey Brin, Mark Zuckerberg, are all de facto still in control of their companies, even in the cases where they've "stepped back", because of their shareholder power (and dual-class shares, which I am still shocked is legal). And they're still wildly rich because of it. The C-level folks we're talking about, generally all hold a ton of company stock. If we accept that a given company has committed mass harm, and that the founders and C-level folks were complicit and knowing, their stock values need to be literally zeroed out.

The effect of this issue applies to stockholders too: They'll happily keep investing in bad companies because those bad companies make money and don't see any meaningful penalties. We have to destroy bad companies, make their stock worthless, so that the risk of that is factored properly into stock values.


> Possibly, but this government action could automatically trigger unemployment benefits...

I like this in a perfect world, but I think in reality it causes too much disruption, and not a type that's beneficial for consumers in the short run. Normally that doesn't matter, but sometimes it does. If AT&T is wiped out tomorrow, that's a lot of people losing their phone and/or internet service all of a sudden, and for many of those people their primary contact for ordering goods and services, or how they get emergency service access (911), etc.

What about Walmart? Walmart has eaten up the normal vendor market in large chunks of America. If Walmart was closed tomorrow, it would take a while for people to set up something to serve all the rural people that go there as their primary location for groceries, supplies, clothes, tools, etc. I imagine in a lot of places groceries would be sparse.

Once you get into things that are even more like utilities, it gets even more problematic. Private companies that act as utilities, like natural gas truck delivery?

I think there are lots of reasons and possible unforeseen problems with just wiping out a company. I think beheading the company and grafting some other head into place might alleviate those problems. At best, it's ensuring the problematic decision makers are gone and the the company can try to survive with the resources it has (whatever wasn't fined away) and the employees have time to plan and jump ship if it's still bad or benefit from better management, and at worst is a slower death which allows for the market to take over more naturally.

> A big issue I have is with founders. Jeff Bezos, Larry Page, Sergey Brin, Mark Zuckerberg, are all de facto still in control of their companies

Yeah, and that's why I think it might also require special provisions on boards and or managers that have stock. Maybe an inability to sell or exercise voting rights for a period (those would be some interesting votes, where the majority shareholders can't participate).

> We have to destroy bad companies, make their stock worthless, so that the risk of that is factored properly into stock values.

That's one of the reasons I think we shouldn't go that far. What employee is going to blow the whistle when it's not just hard times for their company, but when they know they may be responsible for putting 30k people out of a job? At certain points, punishing too hard can have perverse incentives. We want people to come forward. We want people to think that this might be hard, but it's possible to weather it and eat the bitter medicine and come out the other side either better or at least still alive.

And for regular stock holders, this is way more complicated. Do we want to punish regular people that happened to have some of that stock but didn't have any inkling of what was going on? What about all the people that get advance notice and sell so they reaped the benefits of the high stock but avoid the drop on bad news, and the possible immediate loss (which the buyer unfortunately would get both of). Going back in time to revert sales just doesn't seem feasible to me, both because of how that may cascade for other stock bought with the profit, and because how do you tell when the cutoff is?

I think there's too many possible unforeseen problems with just stopping the company. I mean, there's also a lot with lopping off the head and replacing it, but by it's nature less, I think.


I feel like if this possibility existed, though, the market would adjust to the risk. Stocks for "innovative" companies wouldn't spike as high because the risk we find out how the sausage is made is higher. Individual and outside stock owners would understand that risk going in.

The Walmart problem I definitely understand, I've seen small towns essentially replaced by Walmarts. It's possible in that case we could employ another form of corporate execution: Nationalization. Perhaps in a short-term form where the government oversaw the process of spinning down the business gradually.


> It's possible in that case we could employ another form of corporate execution: Nationalization. Perhaps in a short-term form where the government oversaw the process of spinning down the business gradually.

Actually, that might be a good middle ground, as long as there were still provisions to try to claw back any severance to execs. I'm not sure I trust all civil servants to be quite tenacious enough when it doesn't affect their own prospects.

There would also have to be provisions that required it be defunct within a certain time frame. Otherwise I'd be afraid it would be repurposed as a tool to nationalize companies without closure that avoided the discussion and vote as to whether that's a good idea by using possibly fabricated charges. That's a powerful tool to have with bad incentives in place if the government can gain from taking over the companies.


>Do we want to punish regular people that happened to have some of that stock but didn't have any inkling of what was going on?

Sure, why not? The market has been doing this itself every 10 years or so for a long time. It'd be just another form of bankruptcy. I have to say that it's truly odd to see someone lamenting a company going out of business on HN.

I'm going to ignore the special pleading of "30K employees" and Walmart and the yada yada of extreme examples. Do those companies do what Moviepass did? Was Apple sufficiently punished in their wage-collusion case? I'd say no to both.

Corporate malfeasance is essentially legal, at least in the US.


> Sure, why not? The market has been doing this itself every 10 years or so for a long time. It'd be just another form of bankruptcy. I have to say that it's truly odd to see someone lamenting a company going out of business on HN.

We're talking about government action forcing a company out of business, so extra-market action. If it was the market, I would probably err on the side of "it does what it does, and people should have paid attention", but if it's Tuesday and everyone is none the wider and Wednesday the government says your place of employment no longer exists by fiat, that's something else.

> I'm going to ignore the special pleading of "30K employees" and Walmart and the yada yada of extreme examples. Do those companies do what Moviepass did? Was Apple sufficiently punished in their wage-collusion case? I'd say no to both.

We're talking about legislating new laws in this case, and not a law about Moviepass, but a law about any company that finds itself doing similar things. You can't ignore how it affects other companies and situations, because that's how it will be applied, exactly as it was written or interpreted. The market provides nuance, because it's really myriad people making their own decision. Laws don't, they are interpreted by regulators and or lawyers, judges and juries. Any nuance needed needs to be spelled out.

> Corporate malfeasance is essentially legal, at least in the US.

Yes, which is why we were discussing ways to combat it. It's not like my position could in any way be construed as "don't do anything". In all cases, I was just arguing for a different, more targeted way to punish the company, and perhaps one which didn't provide poor incentives for discoverability of the crime.


MoviePass is already dead.


Corporations are people!*

* until a crime is committed


Everyone should get a corporation at birth, and all actions done by that individual should be done for that corporation. Maybe things would change then.



So you would need to use your sibling's and/or friend's corp?


I would also trot out ENRON as another example, on a much larger scale. The only person in the entire fiasco that actually did serious jail time was Jeffrey Skilling who was sentenced to 14 years and was released in 2019.


Well, CEO Ken Lay might have done serious jail time as well, but he died before sentencing:

https://en.wikipedia.org/wiki/Kenneth_Lay#Enron_bankruptcy_a...

Edit: Given the really suspicious timing, and how the death vacated the conviction, "died".


Andy Fastow getting six years is not serious jail time? And his wife got a year. I think they were non-concurrent to allow their young children to have one parent free at all times.


If corps are people, maybe they should receive jail sentences as such - and then their executives & beneficial owners can carry them out based on liability. A CEO that takes full control and makes a one-man-shop would therefore be fully liable for any sentence received, and can only avoid this be sharing control.


So if I were to own 1 share of $AMZN, I’d be criminally liable for anything the corporation does? Would I do 10 minutes in jail or something?


I used to argue for exactly this. The thing is that people would only invest in companies with executives they personally trust. Which may be a good thing overall, but would be a big problem in the short term.

I definitely think board members and Top executives should be held criminally liable for the actions of the company. Unless they can prove it was a specific bad actor, and that their policies didn't encourage illegal behavior, and that they weren't negligent in discovering and stopping said behavior.

That is, if a delivery driver crashes his car because he was drinking on the job then that is on him. If the same delivery driver is speeding because he was given a list of deliveries that were not possible to make on time, that is on the executives. Conspiracy to break the speed limit, maybe even RICO charges. Even for something that simple.


"Unless they can prove it was a specific bad actor"

That's the opposite of the entire basis of the US criminal justice system. Innocent until proven guilty.

You need to prove it was them. Not have them prove it was another bad actor.


No, it's not. There are affirmative defenses: things that can excuse you from criminal liability if you prove a certain set of facts.

For instance, self defense is generally an affirmative defense: something that the defense must prove to avoid conviction, instead of something the prosecution must disprove.


Youve already been proven guilty by that point

If you can prove somebody else was fully responsible, it goes to them


> maybe even RICO charges

Paging @Popehat...


> Unless they can prove it was a specific bad actor, and that their policies didn't encourage illegal behavior, and that they weren't negligent in discovering and stopping said behavior.

Asking someone to prove a negative is almost impossible. Asking them to disprove 3 is crazy. The prosecution should have the responsibility to demonstrate that the company had a systemic issue that was causing illegal behavior, either as a result of intentional pushes by someone with control, or as a result of wilful or reckless negligence.

How do you prove your policies don't encourage illegal behavior? The only way I can think of is to remove or invert the policy and demonstrate that illegal behavior is unchanged or potentially higher with the reversed policy. Which, incidentally, would be a violation of the law itself. Without an intent component, well-meaning policies that accidentally increase illegal behavior become illegal. Add driver tracking software to ensure people don't speed, but because of poor design the drivers fidget with it while driving? That's a violation. The counter-side is that adding intent makes it much harder to prosecute.

> and that they weren't negligent in discovering and stopping said behavior.

Again, how do you demonstrate that you weren't negligent? Hind-sight will almost always show that there was something you could have done to prevent an incident. Someone will have to create some kind of criteria for determining whether an action/inaction is negligent or not. It makes far more sense to have the prosecution demonstrate that you were negligent by failing to meet such and such criteria than for you to go on a rambling speech about what you did do, and then let the prosecution pick something arbitrary that you didn't do.

Just imagine that you're driving down a dark, unlit, windy country road. You come around a bend, there's a person crossing the road in all-black and you hit them. In court, you are then asked to demonstrate that you weren't negligent. Even if you were following the law, with the benefit of hindsight there are of course things you could have done. You could have driven slower; visibility was low. Maybe you shouldn't have been driving late at night; if you had just woken up, maybe a split-second in reaction time might have made a difference. Maybe if you had been scanning a little wider you would have seen them on the other side of the bend as you were coming up. Now you have to justify why you made each of those decisions, and any slip-up is a guilty sentence.

Other than that, I'm on board. I just don't like pushing the burden of proof onto the accused. It's an end-run around the 4th Amendment. It makes the right against self-incrimination pointless, because refusing to testify makes you guilty and lying is a crime.

It also significantly increases the power imbalance between prosecution and defense. It costs the government almost nothing to prosecute; they don't have to prove anything, so they don't need any investigators or evidence. All those costs are shifted on to the defendant, whose costs have just gone up an order of magnitude. The defendant used to need enough evidence to refute a single material point in the prosecution. If the prosecution says I was negligent because I failed to meet X requirement, I just need to prove I met that requirement or that it doesn't apply to me. If I have to prove I wasn't negligent, I now have to prove that I meet all the requirements. If I fail to pay for enough lawyers to prove each point, the prosecution can simply point to that one as the one I failed.


Clearly this is meant to be silly but if we take it seriously -

Why shouldn't those who stand to benefit from ill-gotten gains be those who suffer the pain when the company breaks the law? At least in a proportional way? If, for example, a felony conviction of a company for fraud incurred a penalty of 10% of the value of the company stock for all stakeholders it would align market price with shadiness of company executives. It would suck getting burned by an executive doing something nefarious you didn't know about but it wouldn't take many events like that to make some very powerful people very interested in ensuring that ethical leadership was in place.


Because while benefit and control are closely correlated, it's sometimes (purposefully) the case that you can have benefit, without control (or oversight).

> a felony conviction of a company for fraud incurred a penalty of 10% of the value of the company stock

Doesn't this sort of happen anyway? How would you prevent it increasing again; are you literally collecting a fee from stockholders (like a kind of anti-dividend)?

> it would align market price with shadiness of company executives

Then corps would just invest more in opaqueness and deniability (which they already do now). Corporations are known for being all PR public face. Plus, it would be easier to tank competition with slander and gossip - making investors even more scandal adverse (but not necessarily more ethically aligned)

> make some very powerful people very interested in ensuring that ethical leadership was in place

Or that there's an easy scapegoat lined up.


I don't think you're liable for any of Amazon's decisions. Maybe if you voted yes on "Engage in crime" but the decisions of executives are their own.


That makes more sense. Maybe I was reading into the parent’s use of the term “beneficial owners”. Every shareholder of a public corporation is a “beneficial owner”.


That actually seems like a great idea. Not 10 minutes of jail time, but some form of liability. If orgs are incentivized to increase shareholder value, and those shareholders face no liability for wrongdoing done to increase their assets worth, then the incentives are out of whack. I don't know what kinds of liability makes sense, but some form seems like a great idea.

If you own one share of amazon, and it gets some penalty, then you face 0.00000002% of that penalty in some way.


Make it actual jail time, and for the company itself.

No monetary flow, no work being done, no contracts honored, restricted and slow (if any) access to assets, etc.

Would it be traumatic? For sure. Potentially "life-ruining" for the company and the people close to it? Sure. Just like jail and prison are for regular people.


You would almost certainly destroy the jobs of innocent workers who did not even know the crime was taking place. That is punishing innocent people along side with the guilty.


While in corporate jail, they can also be contracted to perform labor for less than a $1 an hour like human prisoners are in the US.


Charge them $15 for a 10 minute phone call while we're at it.


I thought a beneficial owner needs to have a certain % share or voting rights? Maybe I'm wrong about that.

What I mean is, anyone with enough skin in the game to have ultimate control. Also, I wouldn't assign sentences based on % ownership/compensation, but rather on control-based blame.


Did you perform or direct someone to commit an illegal act?


Perhaps people should. There's no intrinsic reason why a system must exist where certain kinds of enterprises can be FUNDED by me, I can receive PROFIT from them, but I cannot receive any CONSEQUENCES from them if they commit crimes. One might even say the system encourages the commission of crimes and therefore is clearly in need of reform.


Then company ability to distribute dividends should be restrained if they engaged in criminal actions.


> If corps are people, maybe they should receive jail sentences as such - and then their executives & beneficial owners can carry them out based on liability. A CEO that takes full control and makes a one-man-shop would therefore be fully liable for any sentence received, and can only avoid this be sharing control.

Not shareholders but the officers and directors of the company. We already have this for financials under Sarbanes-Oxley Act of 2002. There was lots of whining that they could not possibly sign off on it because the financials are too complex and with personal criminal and civil liability for CEO/CFO there would be no CEOs/CFOs that would take it. Act got passed and, as if by magic, CEOs and CFOs decided that taking personally the criminal and civil liability was OK.


In this case then nothing would happen, because the "person" is "dead". We need some framework for holding actual people liable for the actions of corporations they control.


No one would run or invest in a company within a country with such a law. It’s basically a global world. Anyone intelligent would leave.


Thanks Obama for this. He went full on corporate... and of course Trump and Biden are the same. In both Clinton and Bush eras (both Bushes), there was more pushback on some of these behaviors.


> First, according to the FTC, MoviePass’s operators invalidated subscriber passwords while falsely claiming to have detected “suspicious activity or potential fraud” on the accounts. MoviePass's operators did this even though some of its own executives raised questions about the scheme, according to the complaint.

I'm going to go out on a limb and say the only reason the FTC was able to establish intent was because someone complained via email or text.

I try not to think about how much illegal activity like this happens all the time that is not prosecutable just because everyone with a modicum of morals was smart enough not to say anything on record.


I think that’s why folks with morals complain in writing. Folks with soft morals complain via phone call


You see this in the evidence of the Arizona lawsuit against Google. They have internal emails from Googlers who dared to complain about the confusing settings for location tracking (How many still work there?). Nothing from the managers who cooked up the scheme.


Yep - i'd be surprised if even a tenth of all white-collar crime is known about.


I thought white-collar crime was usually a person scamming a company. This is a company scamming their customers, which I think happens far more than 10x what we hear about.

Way back in the 90's I had a bank account that paid something like 5 percent interest, but only had a couple thousand dollars in it (maybe). I was between jobs and made no deposits for over a month - only withdrawals and only like 4 of them. I got to wondering about the interest and calculated it various ways. Calling the bank, they confirmed verbally that they use the average daily balance. By my calculations they exactly used the final balance (the minimum for the month). I concluded that someone somewhere realized that changing from "average" to "minimum" would make the bank a few extra bucks. Not a big difference if your balance is fairly stable, but a big deal if it's more volatile. They eventually got bought out a couple times, and interest rates are a joke now anyway.


> I thought white-collar crime was usually a person scamming a company.

You thought wrong. White-collar crime is effectively any crime that does not involve physical effort. Breaking and entering to steal a few dollars can get you months in jail. Pumping and dumping a stock can get you a sports car and a holiday home in the Cayman Islands.


> I thought white-collar crime was usually a person scamming a company.

That's not my understanding of the term "white-collar crime", nor is it the definition used here, for example: https://en.wikipedia.org/wiki/White-collar_crime

The interest calculation problem you describe would fall under what I think is the usual definition of "white-collar crime".


>> The interest calculation problem you describe would fall under what I think is the usual definition of "white-collar crime".

But unless an individual found a way to "take the difference" they would not personally benefit. I'd call that one fraud on the part of the bank, and if it was caught and dealt with the bank might pay a fine but nobody would go to jail. I consider "white collar crime" something that an individual could be charged for, but maybe that's not the legal definition.


Being able to converse in person off the record is one of the big value propositions of being in the bigger cities.


I thought I was just terrible with using my password manager….

This happened to me at least a couple times back in 2016 when I was seeing 2+ movies with MoviePass. I would get to the movie theater and all of a sudden be locked out. I would need to reset my password standing on the curb waiting to get a damn email over 500kbps LTE.

Good to know it wasn’t my fault and that the public in general is now aware of this behavior.


"Under the proposed settlement, MoviePass, Inc ...will be barred from misrepresenting their business and data security practices."

Isn't this how things are supposed to be from the onset? That'll teach 'em!


Hey now, the government isn't messing around:

> violation of such an order may result in a civil penalty of up to $43,792

Oh. I think it would actually be more punitive to literally slap them on the wrist.


And this here is the sad reason why these schemes will always happen.

It's simply more profitable for them to pay the negligible fines/fees.

I'd bet dollars to donuts this would change immediately if there were criminal liabilities involved.

But since corporations are rich people who face no repercussions and who can limitlessly lobby to craft laws bespoke to them, I don't see that happening any time soon.


Amazing. Makes me glad I signed up with PayPal.

Near the end there so many people were cancelling that if you used a credit card they would, without your consent or interaction, start your service up again. https://www.mentalfloss.com/article/559352/moviepass-reinsta...


The government knows the executives at MoviePass committed theft, but we will not see any criminal charges filed.


I don't think this necessarily precludes formal criminal charges. Even the dissenting opinion was like "this is clearly a crime, but outside of the FTC's authority".


It is a prediction based on how many times I see SEC/FTC/FCC/FAA/other government agency report on misdeeds, but it never results in any criminal charges against any person. The responsible parties are never even named, effectively making it so all these investigations and reports do not result in the slightest bit of deterrent.

Another even better example was linked in another comment in this thread:

https://www.sec.gov/news/statement/stein-waivers-granted-dis...


This is more of a failure on the justice department. Federal regulators are not prosecutors and it's probably for the best that they don't have the authority to lock people up. But it certainly feels like we don't have enough criminal law on the books for executive malfeasance.

This case may be a bit different though - they apparently left a pretty big paper trail:

> When Lowe and Farnsworth presented the disruption program to other executives of Respondent MoviePass, one executive warned that the password disruption program “would be targeting all of our heavy users” and that “there is a high risk this would catch the FTC’s attention (and State AG’s attention) and could reinvigorate their questioning of MoviePass, this time from a Consumer Protection standpoint.” (Emphasis in original).

> Another executive agreed, warning of “FTC Fears: All [the other MoviePass executive’s] notes about FTC and PR [public relations] fire are my main concerns as I think the PR backlash will flame the FTC stuff.” (Emphasis in original).


Crime is a social construct.

edit: A poor person who steals is charged. A rich person who steals behind the facade of a company is not. We call the poor person a criminal. It's entirely divorced from an actual moral framework, but simply constructed. I was agreeing with the commenter I replied to.


I don't understand why you are getting downvoted. When people say they support "Law and order" they are not talking about all crime—they are not referring to fraud or market manipulation for example (white collar crime). They are referring to enforcing laws on just a certain subset of society.


I think if I'd instead written "This is what people mean when they say 'Crime is a social construct'" it wouldn't have been downvoted from the outset. "X is a social construct" is heavily associated with a certain viewpoint that HN tends to reject. But I quite like the symbolism of being downvoted "superficially" until I edited to explain in more detail.


I avoid progressive jargon when talking on HN. It's actually kind of a useful exercise to be able to address the concepts directly but concisely without the vocabulary.

It does mean I lose access to a lot of the background support. Jargon, in every field, brings in a whole wealth of connected concepts and helps you communicate precisely. But some words get "skunked" (overloaded with confusing, contradictory, or pejorative meanings), and I avoid them when I think I won't be understood.

I don't fool myself into thinking I'm actually persuading anybody. The best I can hope for is a vague notion that somebody might remember that they read something once. And that works best if I'm not automatically downvoted -- which I know I will be if some people reject it out of hand.


> They are referring to enforcing laws on just a certain subset of society.

Or enforcing a certain subset of laws on all society.

And it's not just the "bigbiz-friendly" reds, it's also the blues with their "lets not punish non-violent crime". The fact is laws in the US (and elsewhere) are written, but unevenly enforced, as such what remains is quibbling over priority. I want to see more punishments for white collar crime, but I also want to see less leniency for repeated blue-collar crime too.


Less leniency? "Blue-collar crime" in the US carries some of the most draconian penalties of any developed nation.


Some of, as in, cherry-picked tails. It has some unreasonably selectively-lenient places too, Just ask Seattle.

You also have to either take liberties with either "developed", or with "draconian", given some of the Asian and middle-eastern developed nations.


The difference being "the blues" have never pretended to be the party of law and order.

Because, as you noted, the "bigbiz-friendly reds" do not actually support law and order either, the term "law and order" is in reality a dogwhistle.

https://en.m.wikipedia.org/wiki/Dog_whistle_(politics)


> the term "law and order" is in reality a dogwhistle

funny that you brought it up then. You also provided a WP article to define "dog whistle", but nothing supporting "reds do not actually support law and order" which seems the crux of you argument.


So are criminal charges.


And the entire concept of ownership.

It's actually quite unbelievable how there can be societies that do have the concept of a death sentence, but don't have the concept of a property nullification sentence. "You may live, but you have to start at zero and any obligation someone might have to you is nullified". The inverse of bankruptcy, basically.


That's cause this idea is completely immoral


Moreso than the death penalty, in your opinion?


So are movies.


Movies are real physical artifacts. Calling them a social construct is beyond specious.


I was just joining the thread


Simplistic. A poor person is not usually trusted, so their thefts are often more egregious.


I disagree with the characterization that MoviePass’ theft is less egregious than a poor person’s theft, such as of a physical item.

MoviePass’ theft contributes to a weakening of trust amongst everyone in society, which is a much more difficult problem to address than theft of physical goods.

Not that society should be lenient on either.


If I steal an item I deprive a person of that item. But the manner in which it is stolen can also cause damage, e.g. breaking and entering. People in positions of trust are able to steal with minimal damage caused by the method of theft itself.

> a weakening of trust amongst everyone in society

That's a very vague accusation, and can apply to nearly anything immoral. MP should return any money due, have it's credit score damaged, and punished for wilful fraud - but I wouldn't compare it to violent theft, or B&E.


>“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,”

As expected.


MoviePass was as much as much of a tech company as WeWork. Having a website doesn’t make you a tech company.


The VCs involved are what determine whether any company is a tech company

It is how they can convince others to use a favorably high revenue multiple for selling any portions of the business to other people

There, saved you some time


I sort of like the peopleware description of technology "anything that didn't exist when you were a kid is technology"

In that sense movie theater subscriptions counts as technology. Is moviepass still dumb? Yes.


I guess that also means that Gritty is technology. I like to think that Gritty would approve of that.


im not sure id put MoviePass in the same category as FAANG


It’s different degrees of abuse. Moviepass committed fraud, and FAANG are not committing that kind of crime, they do engage in sketchy things. The whole ad business model is sketchy, getting people addicted to “binging” on content is questionable, Amz and its commingling issues, copying resellers, it’s terrible review system and well, social media siphoning personal data unscrupulously.... that’s not exactly stand up catagory.


im certainly not defending big tech, but as you say, they have different problems than MoviePass did.


True, Our problem is they don’t think they have a problem when they clearly do.


s/big tech/business/


I signed up for Moviepass the month they came out.

Canceled the month they started to have blackouts.

Great deal, would do again if any VC wants to try again for the goodness of the movie industry.


I believe the first blackout was during the release of 'It'.

Of course they never called it a blackout... they just always seemed to experience technical issues... and always on Friday or Saturday... on always on a Friday or Saturday when a popular movie was being released. What a coincidence!


I had a similar experience. Got to see lots of movies in a small, comfortable (and expensive) NYC theater while always pre-picking my seats.


AMC has a similar program. It's not as good, but if you like movies and have the time, it's still a good deal.


It appears the MoviePass master plan for world domination was inspired by the underpants gnomes of South Park[a]:

Step 1. Charge customers $10/month for unlimited passes to movie theaters

Step 2. Change passwords to prevent customers from getting their passes

Step 3. ???

--

[a] https://www.youtube.com/watch?v=tO5sxLapAts


Matt Levine's summary in his current newsletter is this:

"So at some point the company looked for ways to make this insane business model work, and it found one. It’s pretty simple: What if MoviePass collected your $10 each month and then, when you asked it for movie tickets, it ignored you? Then it could keep collecting your $10 a month without spending money on tickets. Eventually you’d get annoyed by not getting what you paid for, and you’d try to cancel your membership and get your money back, but MoviePass could ignore that too and keep collecting the $10. Giving people unlimited movie tickets for $10 a month is a good way to get rapid customer growth; telling people you’ll give them unlimited movie tickets for $10 a month, but not actually doing it, is a way to pivot to profitability."

And the way they ignored you was even worse - changing the passwords on their highest volume users.

Anyway, it's a great read. Subscribe, it is a fantastic free newsletter. Past awesome coverage included the RobinHood stock hijinks. (Bloomberg's Money Stuff newsletter, sub here: https://www.bloomberg.com/account/newsletters/money-stuff)


Surely some enterprising state AG or class action attorneys could take this up, no?


But if that where the case, they could just recover their passwords? From the sound of the "suspicious activity" line, it seems they may have been blocked?

Also, I wonder how the corp avoided chargebacks



I owe a debt of gratitude to MoviePass. Their shenanigans led me to learn about virtual credit cards (privacy.com in my case). I'll never be surprise billed by a subscription service again.


Unfortunately, privacy.com is only available in the US. I had been looking for an alternative for quite some time, but recently I stumbled onto the fact that Wise (formerly TrasferWise) will give you a seemingly unlimited amount of virtual cards if you open an account with them.

As far as I can tell this isn't documented on their website, but I can definitely get new cards on demand and disable them as necessary. In fact, their website still mostly references MasterCard, however I have received a physical Visa card and the virtual cards are all Visa as well.

This isn't as sophisticated an offering as privacy.com because you can't set a fixed limit per card, but it's a lot better than nothing.


I believe Wise has a limit of upto 3 virtual cards. Are you able create more? source: https://www.kasareviews.com/wise-debit-card-review-pros-cons


I have three now and the UI to create more is still available. It's possible that clicking on it would fail (I don't want to needlessly waste card numbers), but I have definitely verified that replacing card details works: there is a button that lets you invalidate an existing card and create a new one.

In that sense it may be limited in the amount of cards you can have at once, but unlimited in the number of card details you could go through.


you will once a big enough fish captures/compromises privacy.com.


Unpopular opinion, but MoviePass could have survived a lot longer if they had more funding. I think there could have been a real opportunity with establishing themselves the main funnel to getting consumers to physical theaters. They couldn't hold on long enough to see what could be possible with such a moat.


MoviePass could have survived longer if they had more money, and a different business model. The problem is they were letting you go to movies at AMC and Cinemark for less than they bought the tickets, and both AMC and Cinemark said they wouldn't negotiate lower prices for them.

They could have had a small but cult business contracting with smaller theater chains, but they didn't.

They could have also bought tickets in bulk, and sold them through the app, but they didn't.

They could have reserved tickets at premiers and sold them at a markup, but they didn't.

They could have done a LOT of things to make money, but they didn't.

I say this as a onetime holder of more than 1% of publicly available shares. And I think at the time, one of the largest non-institutional shareholders.

Lost a lot of money on wanting a dumb "title".


AMC and Cinemark would have negotiated if the moat was properly fortified is my thesis. They didn't have enough runway to determine the feasibility.

Anyone could've looked at MoviePass' public filings and determined they would be no problem to AMC.

What if Uber and Lyft didn't subsidize ridesharing for years? Yellow cab service would still be the market leader today.


Uber and Lyft created new supply by attracting new drivers to the market. MoviePass was not creating any new supply or any value at all. It simply inserted itself as a middleman between theaters and consumers and pulled in subscribers by literally paying for their movie tickets with VC funding.


> What if Uber and Lyft didn't subsidize ridesharing for years?

That is different. Uber and Lyft were paying drivers to drive.

MoviePass was giving people basically free tickets, but paying FULL FARE at AMC and Cinemark.

AMC and Cinemark have no reason to negotiate because what would happen if MoviePass stopped giving away tickets to AMC and Cinemark? Users would leave MoviePass and continue going to AMC and Cinemark at full price.


Not at nearly the same volume.


Thanks for the free tickets! Just curious, what was your motivation for investing so heavily if you knew the business model was dumb?


For the bragging rights.

It was already about to be delisted and I think it was sub $1/share. So I looked up how much I'd need to own to match the largest individual investor, and decided.

I could have invested the paltry amount (I actually cannot remember how much, but it was < $10k in my IRA) in something worth while, or... burn it all to own more more than any other individual investor at the time that I did it.

I only held for a couple of days, before selling it at a ~70% loss - or vanguard liquidating when it delisted - I cannot remember now.

But it was a fun ride and brag I got to have. People at the office cheered for me. People in my house berated me.


Haha is "the office" WallSteetBets?


I had never even used reddit before just a few months ago, so no, it was an actual office lol.


Not the guy you asked, but he just listed a half-dozen or so things he probably expected them to expand into that were promising/could have worked out, so I'm guessing he invested hoping they'd do those things, and was pissed when they didn't.


>The problem is they were letting you go to movies at AMC and Cinemark for less than they bought the tickets, and both AMC and Cinemark said they wouldn't negotiate lower prices for them.

Considering the Cinemark near me is a $1.50 per ticket second run place...


Sure, but any business can survive indefinitely if they're given unlimited funding with no expectation of returns.

In your opinion, what's the point of being the main funnel to theaters if you're losing money hand over fist to do so? What was the plan for profitability? Was the goal to somehow strong arm movie theaters into discounted pricing? Why would theaters agree to that when there's no benefit for them to do so, they're the ones with the actual product and it's irrelevant to them if MoviePass survives?

The only way their business model can work is if the majority of customers sign up and never use it, which is a very weird thing for a business to depend on, IMO.


Gym membership.

> no benefit

Movie theater attendance has been dropping steadily. Theaters, especially today's multi-plexes, are vast wastelands of empty seats the majority of the time. There absolutely is a benefit to them selling more tickets at off-peak times, or to not-so-hot films, or just as an incentive to sell popcorn. Keep in mind all this extra volume would cost theaters ZERO in additional marketing expense.


> Gym membership. > Movie theater attendance has been dropping steadily. Theaters, especially today's multi-plexes, are vast wastelands of empty seats the majority of the time. There absolutely is a benefit to them selling more tickets at off-peak times, or to not-so-hot films, or just as an incentive to sell popcorn. Keep in mind all this extra volume would cost theaters ZERO in additional marketing expense.

But if theaters wanted to do that then they would lower prices themselves.

And for all we know, most people signing up for MoviePass were the same people who were still going to the movies anyways.


> The only way their business model can work is if the majority of customers sign up and never use it, which is a very weird thing for a business to depend on, IMO.

This is essentially the concept of insurance, is it not?


Kind of, but the insurance business depends on the costly events being rare and mostly independent of the customers' choices (e.g., getting sick is the event for health insurance, getting into a car accident for auto insurance).

MoviePass is the opposite. It sells/sold a product that is frequent enough and dependent on customers' choices. The MoviePass product is pitched as way to go to the movies whenever and as often as you want, thus maximizing the frequency of costly events (i.e., paying for theater tickets).


It's not the same at all.

Insurance protects people financially from unlikely and *undesirable* events they don't want to happen. Nobody in good faith wants to get in a car accident or have a medical emergency. Insurance "works" by assuming most people won't have to or want to use it.

MoviePass is doing exactly the opposite, though. They're selling a desirable product for much cheaper than normal while paying full price themselves and hoping people won't actually take advantage.


I didn't suggest that MoviePass functioned like insurance, only that it's not really an unusual concept. It's just clearly not workable as you point out.


Insurance has the additional model of finding ways to avoid paying out claims even when people do try to use it. I think MoviePass would have a hard time stopping users from using their tickets once they already purchased them through the app (although they did try by blacking out certain movies).


Insurance works best when it's something that appeals widely (eg: all drivers must carry insurance) but is used rarely (very few drivers will have an accident at any given time). MoviePass was offering a service with narrow appeal (avid moviegoers) that used the service frequently.


> The only way their business model can work is if the majority of customers sign up and never use it, which is a very weird thing for a business to depend on, IMO.

This is basically how gyms are profitable.


Most traditional gyms also have very high up front costs and extremely low unit costs, so the benefit from scale. You could go every day and they're still not really losing money on you (I don't think you can do $50 of wesr and tear every month).

Of course there's a limit to how many daily active users one gym can service and it's better for them if they have lots of paying, inactive users. But at no point does a user's activity cost the gym money.


Maybe, but a gym membership isn't trying to sell me somebody else's product for 1/3 the price, while paying the full price themself.


They could never survive -- their customer demand came from selling $10 movie tickets for $9 -- funded entirely by investor burn.

A sustainable business is one where you sell cinema tickets for $11 having bought them for $10 with the customer choosing you because you've added more than $1 in value for them.

It's a car racing down a hill. The acceleration looks exponential but it's just going to crash.


I always assumed that MoviePass's endgame was to funnel so many of the ticket sales through them that they could strong-arm the theaters into lowering their ticket prices. They thought if they captured the movie ticket sales market, they could tell the theater "Start allowing us to pay only $2/ticket or we'll remove you from our app and you won't make ANY sales!"

I could be totally talking out my ass, but that's what I always figured. I don't see how else they could be profitable.


It was more like them selling $300 of movie tickets (I'd watch one a day) for $10. Everyone only used them for the arbitrage.


MoviePass was started by a group of conmen who ran scams in India.

https://www.businessinsider.com/moviepass-owner-emerged-from...

The company was a classic pump-and-dump; it was never supposed to last this long. Somewhere along the line some other, US-based conmen ("serial entrepreneurs") got involved, probably holding the bag for the founders who got their stock profits and bailed.


I think their main mistake was antagonizing the big theater chains. They should've had their hand outstretched to the chains, consistently, from the very beginning.

The (probably smaller) chains that play ball and negotiate selling cheaper tickets to moviepass get rewarded with more foot traffic, the chains that don't play ball get punished in small ways.

By gently and gradually steering traffic away from AMC, they would've put themselves in a much better position for negotiation.


How is buying millions of tickets "antagonizing"? And what intelligent company turns down a 5-million ticket order - at full price! - from a single customer in favor of selling 3 million tickets one-by-one?


I was referring to the statements they made intentionally taunting AMC. That's not how you get people to come to the negotiating table.

AMC absolutely did the right thing: they kept their mouth shut, collected the money, waited for MoviePass to fizzle out, then launched their own (presumably profitable) subscription service.


...and watched its stock decline from mid-20s when MP launched to under $5 if I remember correctly. Later it became a WSB meme stock, but that is a different story.


The analogy with Netflix's DVD-by-mail throttling is astonishing. Same fraud but "done with computers".

https://en.m.wikipedia.org/wiki/Criticism_of_Netflix


Weird. I was using MoviePass right at the end and they didn’t need to change my password, they just limited what movie and time I could use my card so much it stopped being worth the trouble.

I guess they could have changed my password to keep me from canceling…


Classic tactic, similar to insurance companies who advertise great service but throw every caveat in the book at you when you actually file a claim, such that you can’t get to use, you know, what you actually paid for…

There has to be a term for this?


There is... fraud.


Yes, it’s called a “contract”.


This is what the chargeback feature of credit cards is for.


Sounds like the FTC has drawn a hard line on dark patterns. Hopefully, they wake up to other deceitful, anti-consumer design patterns.


Yes PNC Bank also does this, I bet they have hacks that they don't want to disclose and just want to smooth over the problem.


okay, but like ... don't we sign away any right to care in the T&C/EULA of services? or like when you go to a baseball game, this ticket can be revoked at any time for any or no reason.

like, it's their company and service, they can do what they want with their data. why is the FTC getting involved here?


For a subscription based business, that’s just extremely unethical


Couldn't users just go through the reset password flow or did MoviePass disable that as well? Not saying this isn't bad just trying to understand how far MoviePass went to stop users.


Not sure, but I would be happy if this case was brought even if users were still able to reset their passwords to access the service. This would mean that the FTC takes dark patterns that attempt to prevent a customer's rightful use of a service seriously.

If MoviePass had concerns about losing money on customers who had not violated any terms, the right thing to do would be to re-evaluate their plans/pricing.


That's amazing. Matt Levine covered it in his column today as well--haven't had time to read it yet, but it's probably good as usual https://www.bloomberg.com/opinion/articles/2021-06-08/moviep...


I suspect you're downvoted for recommending something you didn't read, but yes, it is very good:

> If you sell $20 worth of movie tickets for $10, people will sign up, you will have rapid user growth and you can probably get someone to think that that’s valuable, even though in fact every user that you add costs you $10.

> But — unlike most of the “MoviePass economy” — MoviePass was not actually a venture-funded startup, did not raise piles of money, and was somewhat constrained by economic reality. So at some point the company looked for ways to make this insane business model work, and it found one. It’s pretty simple: What if MoviePass collected your $10 each month and then, when you asked it for movie tickets, it ignored you? Then it could keep collecting your $10 a month without spending money on tickets. Eventually you’d get annoyed by not getting what you paid for, and you’d try to cancel your membership and get your money back, but MoviePass could ignore that too and keep collecting the $10. Giving people unlimited movie tickets for $10 a month is a good way to get rapid customer growth; telling people you’ll give them unlimited movie tickets for $10 a month, but not actually doing it, is a way to pivot to profitability.


I suspect a lot a corps sub to a similar model:

Make it not-obvious when something is billed, and make sure never to tip the customer off (e.g. by sending a monthly invoice). More than one company made it very easy to activate non-obvious reoccurring payments, and then communicate nothing wrt to the fact.

On that note: Fuck you NowTV.

also non too happy with Paperspace.


Add in a startup fee and it would be a gym membership.




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