When an executive warned that the practice would catch the attention of federal regulators and state attorneys general, Mr. Lowe responded in writing “OK I get it,” suggesting the company try it with “2 percent of our highest volume users,” the F.T.C. said.
In a separate effort, the company required the 20 percent of subscribers who used the service most often, about 450,000 people, to submit photos of their physical movie tickets for approval through the app, telling them they had been “randomly selected” for the program, the F.T.C. said. Those who failed to properly submit the tickets more than once would have their accounts canceled, the F.T.C. said.
The automated verification system often did not work on common mobile operating systems, and the software failed to recognize many user-submitted photos, the F.T.C. said. The program blocked thousands of people from using the service, the F.T.C. said.
Mr. Lowe personally chose how many people would be required to submit photos, the F.T.C. said.
The trip wire was typically set on users who went to more than three movies per month, the F.T.C. said. Mr. Lowe set the thresholds, it said.
In addition, a data breach in 2019, which was previously reported, exposed the personal and financial information, including credit card numbers, of more than 28,000 customers, the F.T.C. said.
After three million people signed up — many more than executives had expected — the company perpetually struggled to bring in enough cash to offset costs. In April 2018, the company disclosed to regulators that it had been losing about $20 million a month for several months. In July 2018, it borrowed $5 million after it said it could not pay its bills and experienced a service interruption, but the company insisted its service remained stable.
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