By Alex Samaei
What is Moviepass?
From a user perspective, Moviepass functions as a combination of a MasterCard and a phone app. After subscribing each user receives a MasterCard in the mail with their name on it. This card has no value loaded when it is received. The user then pairs the app with their unique card and can access a list of theaters and showtimes where Moviepass functions. At the moment this includes all AMC, Regal, Frank Theaters, Cinemark, as well as several of other large chains. The service does not work for IMAX or 3D movies, which typically cost a cinema-goer more. When a user decides on a movie they can “check-in” through the app to that particular showing 30-minutes before the showtime and when they are within 100 yards of the theater. At this moment, the MasterCard is loaded with the exact dollar amount that the film will cost. The user can then go and swipe their card, receive a ticket, and enjoy their movie.
If AMC holds true to their words and intends to successfully file a suit against Moviepass they would need standing in state or federal court. In order to satisfy this requirement, the plaintiff would need to show they have injury in fact which has occurred or is imminent to occur, causation between the defendant and the injury, and that a favorable court ruling would remedy it. Already AMC would run into a roadblock in showing that an injury has occurred. This is because they are receiving the full price for each ticket sold through Moviepass regardless of how many times a user makes use of the service. So, what is their injury?
The popular belief is that AMC’s main concern with Moviepass is the association some cinema-goers will undoubtedly make between the two services. The experience that comes with going to the movies is one of the reasons that video streaming services such as Netflix have not whipped out the industry. After all, many feature films are now available On-Demand mere weeks after their opening in cinemas, often while the movie still plays in theaters. If Moviepass were to fail and upset millions of customers, it would be fair for AMC to be upset that they would receive some of the backlash when they did not endorse the service to begin with.
There are grounds to believe that the service will not survive. Their poor customer service has become evident as users have reported not receiving their MasterCards for months after subscribing, yet being charged the monthly fee. The app will often crash stranding the user at the theater with no option except to purchase a ticket out-of-pocket. Moviepass even updated their Terms and Agreements stating that they reserve the right to change the number of movies a user can watch at any time. Ultimately, AMC has stated they believe the $9.99 price point to be unsustainable.
While these are all legitimate concerns AMC and other theaters may have, there has been no actual or imminent injury at this time, so the issue is not yet ripe for a court to rule on.
Can AMC ban Moviepass in their establishments?
The short answer is no. Moviepass users pay for their ticket using a valid MasterCard Debit Card. As a merchant who regularly accepts MasterCard Debit Cards, AMC has entered an agreement with the card-processing network. These contracts prohibit the merchants from taking certain actions such as setting minimum amounts on debit cards. While any violation can result in fees and other consequences, many merchants still do not abide by all the rules. However, for a large corporation such as AMC they would need to strictly comply to all standards when dealing with the large Moviepass subscriber base.
Some theaters have been reportedly using these strict regulations to justify asking Moviepass users for age-verifying identification. While this is not an AMC nationwide policy, users have taken to internet forums to voice their experiences being asked for ID when trying to use Moviepass at their local AMC theater. Multiple users were told that this was to ensure the card was being used by the proper owner in order to maintain legal standards required by MasterCard.
AMC has taken some legally binding steps towards limiting the usefulness of Moviepass. They updated the Terms and Conditions of their rewards program, Stubs, adding Moviepass to the list of ineligible purchases towards earning rewards. Theoretically this means that users will not receive points towards free products when they use their Moviepass to pay.
Overall, it is unlikely that AMC or any other cinema corporation will bring charges against Moviepass until it is clear that their business model has failed.
Student Bio: Alex Samaei is currently a 3L at Suffolk University Law School and is the Chief Content Editor for The Journal of High Technology Law. He holds a B.S. in Industrial & Systems Engineering from the University of Florida.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.