MoviePass, Inc.; Analysis of Proposed Consent Order To Aid Public Comment
| Citation | 86 FR 32039 |
| Published date | 16 June 2021 |
| Record Number | 2021-12701 |
| Section | Notices |
| Court | Federal Trade Commission |
Federal Register, Volume 86 Issue 114 (Wednesday, June 16, 2021)
[Federal Register Volume 86, Number 114 (Wednesday, June 16, 2021)]
[Notices]
[Pages 32039-32041]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-12701]
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FEDERAL TRADE COMMISSION
[File No. 192 3000]
MoviePass, Inc.; Analysis of Proposed Consent Order To Aid Public
Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement; request for comment.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices. The attached Analysis of Proposed Consent Order to Aid
Public Comment describes both the allegations in the draft complaint
and the terms of the consent order--embodied in the consent agreement--
that would settle these allegations.
DATES: Comments must be received on or before July 16, 2021.
ADDRESSES: Interested parties may file comments online or on paper by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Please write ``MoviePass,
Inc.; File No. 192 3000'' on your comment, and file your comment online
at https://www.regulations.gov by following the instructions on the
web-based form. If you prefer to file your comment on paper, mail your
comment to the following address: Federal Trade Commission, Office of
the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex D),
Washington, DC 20580, or deliver your comment to the following address:
Federal Trade Commission, Office of the Secretary, Constitution Center,
400 7th Street SW, 5th Floor, Suite 5610 (Annex D), Washington, DC
20024.
FOR FURTHER INFORMATION CONTACT: Thomas B. Carter (214-979-9372),
Federal Trade Commission, Southwest Regional Office, 199 Bryan Street,
Suite 2150, Dallas, TX 75201.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34,
notice is hereby given that the above-captioned consent agreement
containing a consent order to cease and desist, having been filed with
and accepted, subject to final approval, by the Commission, has been
placed on the public record for a period of thirty (30) days. The
following Analysis to Aid Public Comment describes the terms of the
consent agreement and the allegations in the complaint. An electronic
copy of the full text of the consent agreement package can be obtained
at https://www.ftc.gov/news-events/commission-actions.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or before July 16, 2021.
Write ``MoviePass, Inc.; File No. 192 3000'' on your comment. Your
comment--including your name and your state--will be placed on the
public record of this proceeding, including, to the extent practicable,
on the https://www.regulations.gov website.
Due to the COVID-19 pandemic and the agency's heightened security
screening, postal mail addressed to the Commission will be subject to
delay. We strongly encourage you to submit your comments online through
the https://www.regulations.gov website.
If you prefer to file your comment on paper, write ``MoviePass,
Inc.; File No. 192 3000'' on your comment and on the envelope, and mail
your comment to the following address: Federal Trade Commission, Office
of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex D),
Washington, DC 20580; or deliver your comment to the following address:
Federal Trade Commission, Office of the Secretary, Constitution Center,
400 7th Street SW, 5th Floor, Suite 5610 (Annex D),
[[Page 32040]]
Washington, DC 20024. If possible, submit your paper comment to the
Commission by courier or overnight service.
Because your comment will be placed on the publicly accessible
website at https://www.regulations.gov, you are solely responsible for
making sure your comment does not include any sensitive or confidential
information. In particular, your comment should not include sensitive
personal information, such as your or anyone else's Social Security
number; date of birth; driver's license number or other state
identification number, or foreign country equivalent; passport number;
financial account number; or credit or debit card number. You are also
solely responsible for making sure your comment does not include
sensitive health information, such as medical records or other
individually identifiable health information. In addition, your comment
should not include any ``trade secret or any commercial or financial
information which . . . is privileged or confidential''--as provided by
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2),
16 CFR 4.10(a)(2)--including in particular competitively sensitive
information such as costs, sales statistics, inventories, formulas,
patterns, devices, manufacturing processes, or customer names.
Comments containing material for which confidential treatment is
requested must be filed in paper form, must be clearly labeled
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular,
the written request for confidential treatment that accompanies the
comment must include the factual and legal basis for the request, and
must identify the specific portions of the comment to be withheld from
the public record. See FTC Rule 4.9(c). Your comment will be kept
confidential only if the General Counsel grants your request in
accordance with the law and the public interest. Once your comment has
been posted on the https://www.regulations.gov website--as legally
required by FTC Rule 4.9(b)--we cannot redact or remove your comment
from that website, unless you submit a confidentiality request that
meets the requirements for such treatment under FTC Rule 4.9(c), and
the General Counsel grants that request.
Visit the FTC website at http://www.ftc.gov to read this Notice and
the news release describing the proposed settlement. The FTC Act and
other laws that the Commission administers permit the collection of
public comments to consider and use in this proceeding, as appropriate.
The Commission will consider all timely and responsive public comments
that it receives on or before July 16, 2021. For information on the
Commission's privacy policy, including routine uses permitted by the
Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission (``FTC'' or ``Commission'') has
accepted, subject to final approval, an agreement containing a proposed
consent order (``Proposed Order'') from MoviePass, Inc., a corporation,
Helios and Matheson Analytics, Inc. (``Helios''), a corporation,
Mitchell Lowe, individually and as an officer of MoviePass, Inc., and
Theodore Farnsworth, individually and as an officer of Helios
(``Respondents''). The Proposed Order has been placed on the public
record for 30 days to receive comments by interested persons. Comments
received during this period will become part of the public record.
After 30 days, the Commission will again review the agreement and the
comments received and will decide whether it should withdraw from the
agreement and take appropriate action or make final the agreement's
Proposed Order.
This matter involves Respondents' advertising, promotion and sale
of the movie-viewing subscription service ``MoviePass,'' which offered
consumers access to one movie per day at their local movie theaters for
a monthly subscription price. The FTC complaint challenges two aspects
of Respondents' marketing of MoviePass:
First, the complaint alleges that Respondents' offer of one movie
per day was deceptive due to several measures Respondents took to
prevent consumers from using the service as promised--measures that
included invalidating certain consumers' passwords, adding a difficult
and defective ticket verification procedure to view movies, and placing
undisclosed usage caps on frequent users.
The complaint alleges that this conduct violated two laws the FTC
enforces. First, the FTC alleges the conduct to be a ``deceptive act[ ]
or practice[ ]'' that violates Section 5(a) of the Federal Trade
Commission Act (``FTC Act''), 15 U.S.C. 45(a). The conduct described
above was deceptive because Respondents engaged in it to prevent
consumers from using MoviePass once per day as advertised. Second, the
FTC alleges that Respondents violated the Restore Online Shoppers'
Confidence Act (``ROSCA''), 15 U.S.C. 8403, through the same conduct by
failing to disclose the steps that they took to prevent consumers from
using MoviePass once per day. This failure violated ROSCA in two ways--
by failing to disclose all material terms of the transaction as
required by 15 U.S.C. 8403(1) and by failing to secure consumers'
express informed consent to the transaction before charging their
financial accounts as required by 15 U.S.C. 8403(2).
In addition to the deceptive marketing of MoviePass's ``one movie
per day'' service, the complaint further alleges that Respondents
MoviePass, Inc., Helios, and Lowe misrepresented the data security
measures they took to protect consumers' personal information against
unauthorized access. The complaint alleges that Respondents' actions
constitute unfair or 1 deceptive acts or practices and the making of
false advertisements, in violation of Section 5(a) of the FTC Act.
The Proposed Order is designed to prevent Respondents from engaging
in similar acts or practices in the future. It includes injunctive
relief to address these alleged violations and to prohibit similar and
related conduct:
Part I prohibits Respondents from future
misrepresentations similar to those at issue in the complaint by
prohibiting them from misrepresenting that:
[cir] A service will allow consumers to view one movie per day at
their local theaters;
[cir] A service will allow consumers to view any movie, in any
theater, at any time; and
[cir] Respondents will take reasonable administrative, technical,
physical, or managerial measures to protect consumers' personal
information from unauthorized access.
Part I also features ancillary relief relating to the
challenged conduct by prohibiting misrepresentations relating to (1)
the total costs to purchase, receive, or use, and the quantity of, any
good or service, (2) any material restrictions, limitations, or
conditions to purchase, receive, or use the product or service, (3) the
extent to which Respondents otherwise protect the privacy, security,
availability, confidentiality, or integrity of consumers' personal
information, and (4) any other material fact.
Parts II-VI provide ancillary relief relating to the data
security practices of MoviePass, Inc., Helios, and Lowe. The provisions
thus only apply to businesses these three respondents operate.
[cir] Part II requires a comprehensive information security program
for any enterprise that collects consumers' personal information,
requiring among other things:
[[Page 32041]]
[ssquf] That the information security program contain safeguards
that are based on the volume and sensitivity of the personal
information at risk;
[ssquf] That testing and monitoring of the safeguards are conducted
regularly but no less often than once a year; and
[ssquf] That the information security program be documented,
evaluated, and adjusted in light of any changes to business operations
or new technological advancements.
[cir] Parts III and IV respectively require the three respondents
(1) to obtain an initial and then biennial third-party information
security assessments and (2) to cooperate with the third parties
conducting the assessments.
[cir] Part V requires the three respondents to report to the
Commission any event involving consumers' personal information that
constitutes a reportable event to any U.S. federal, state, or local
government authority.
[cir] Part VI mandates that the three respondents submit an annual
certification regarding their compliance with the Proposed Order's data
security requirements.
Parts VII through XI are reporting and compliance
provisions. Part VII mandates that all Respondents acknowledge receipt
of the Proposed Order and, for 20 years, distribute the Proposed Order
to certain employees and agents and secure acknowledgments from
recipients of the Proposed Order. Part VIII requires that Respondents
submit compliance reports to the FTC one year after the order's
issuance and submit additional reports when certain events occur. Part
IX requires that, for 20 years, Respondents create certain records and
retain them for at least 5 years. Part X provides for the FTC's
continued compliance monitoring of Respondents' activity during the
Proposed Order's effective dates. Part XI is a provision ``sunsetting''
the Proposed Order after 20 years, with certain exceptions. Respondents
MoviePass, Inc. and Helios are exempt from Sections II-X of the
Proposed Order until their bankruptcy cases are closed, and these
bankruptcies led the FTC to not seek a monetary judgment in this
matter.
The purpose of this analysis is to facilitate public comment on the
Proposed Order. It is not intended to constitute an official
interpretation of the complaint or Proposed Order, or to modify in any
way the Proposed Order's terms.
By direction of the Commission.
Joel Christie,
Acting Secretary.
[FR Doc. 2021-12701 Filed 6-15-21; 8:45 am]
BILLING CODE 6750-01-P
