MoviePass executives to pay $400,000 settlement
A former Santa Rosa video store owner and his business partner in a movie subscription service will have to pay a $400,000 settlement for engaging in unlawful business practices.
The Sonoma County District Attorney’s Office reached the settlement with Mitchell Lowe, who co-founded a Santa Rosa video store with his brother before going on to executive roles with Netflix, Redbox and the now-defunct MoviePass, and partner Theodore Farnsworth, according to a news release issued by District Attorney Jill Ravitch. The case was filed by district attorneys in Sonoma, Contra Costa, San Joaquin and Ventura counties.
The settlement was part of the signed stipulated judgment OK’d by Sonoma County Judge Nancy Davis Stark.
In addition to the $400,000 in civil penalties that will be used to benefit charities, the two are enjoined from engaging in any of the alleged unlawful, unfair or fraudulent business practices they committed during their tenure as MoviePass managers, according to the release.
MoviePass, Inc. was a subscription-based ticket service headquartered in New York. Founded in 2011, the service initially allowed subscribers to purchase up to three movie tickets per month for a discounted monthly fee.
In 2017, Helios and Matheson Analytics purchased MoviePass and shifted the business model from a three movie-per-month subscription to offering an “unlimited” subscription plan. However, over the course of the next two years they changed MoviePass’ business model and terms of service multiple times to the detriment of the consumers, the district attorney’s office said.
MoviePass and its parent company were guilty of “unconscionably” changing terms of service during subscription periods, shut down the availability of movies when a certain dollar amount was reached and continuously charged customers after receiving notice of cancellation, among other things, the release said.
Deputy District Attorneys Matt Cheever and Caroline Fowler handled the case on behalf of the Environmental and Consumer Protection Division of the District Attorney’s Office.
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