[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:
    <bullet> 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.
    <bullet> 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.
    <bullet> 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.
    <bullet> 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