MoviePass Parent Company Now Under Investigation For Fraud

MoviePass customers have expressed feelings of being defrauded for some time. But now, the company behind the product is officially under investigation for fraud. Engadget offers the following insight.

“Investigators are examining Helios and Matheson’s financial disclosures, which could lead to civil or criminal charges. MoviePass confirmed that it is cooperating with the New York AG’s inquiry. ‘We believe our public disclosures have been complete, timely and truthful and we have not misled investors,’ Helios and Matheson said in a statement. ‘We look forward to the opportunity to demonstrate that to the New York Attorney General.'”

MoviePass entered the public eye when it started offering a movie a day subscription at local theaters for a flat rate of $9.99 per month. Early adopters were very happy with the service as it provided exactly what it claimed.

Others took a wait-and-see approach thinking that the deal seemed too good to be true. Indeed, the deal was too good to last as the company was losing money on every monthly subscription. The cost of a single ticket in many theaters was more than the cost of the monthly subscription.

MoviePass started down a road of sudden, rapid, and unpredictable pricing and services moves that started alienating existing customers. One day, top theaters in the area were no longer eligible. Certain showings became unavailable without notice.

Eventually, the company decided to stop offering a movie a day and dropped it to three movies per month. The cuts did not stop there. Blockbuster movies like Mission Impossible were removed from the list of movies one could watch. MoviePass curated eligible movies down to the smaller and less popular titles.

Beyond the erratic plan changes is questionable corporate behavior. Once members started canceling their plans, MoviePass started re-enrolling them, thus canceling the cancellation. To some, MoviePass sent email notifications with a new plan requiring the recipient to opt out.

These are not the only antics practiced by MoviePass over the previous year. But it is enough to illustrate the fact that the company has resorted to what seems to be desperate measures on more than one occasion.

The MoviePass financial drama has also spilled over into the mainstream use of the product. On one occasion, everyone who went to see a movie one particular Friday evening was turned away because of what the company called technical difficulties. As it happened, those “technical difficulties” were quite simple. MoviePass ran out of money and had to get an emergency loan to continue operation.

The New York Attorney General has opened a probe using the Martin Act, an anti-fraud statute.