Hitting “reset” has been the top-line news item globally this week. North Korea and South Korea are progressing toward a formal end to the Korean War, 65 years after hostilities were discontinued by armistice. Those who flipped (or more likely clicked) from the first page to the business and technology section of their favorite news pub may have also noted that it was a big week for resets across the board.
MoviePass Makes A Big Pricing Shift
It was often described as the deal that was just too good to be true. For $9.95 a month, MoviePass let customers see as many movies as they wanted to — one a day, every day, if they so desired.
Someone even took them up on their offer.
But that, it seems, is now at an end.
Last week, MoviePass announced it may be permanently removing its monthly $9.95 subscription for one movie ticket per day from its platform. As of April 13th, the $9.95 monthly pass gets new customers four movie tickets per month — and a subscription to iHeartRadio All Access (which normally costs $9.99 a month). CEO Mitch Lowe told news media that he is unsure if the “all you can eat” product will return at all.
Existing users will not have their service change — the four tickets per month replacement will only impact customers that signed up after April 13.
Lowe did note that 88 percent of MoviePass subscribers see fewer than two movies per month — so, in essence, eliminating the option of one ticket per day would only affect 12 percent of its users and still give the majority of people twice as many chances to see movies in a month.
And that was not the only big change announced. MoviePass also modified its platform such that subscribers can only use the pass to buy a single ticket to a movie.
“We recently updated our Terms of Service to reflect that MoviePass subscribers are only permitted to see certain movies in movie theaters only once, the company wrote on its website, suggesting that putting that restriction on the movie selection will encourage people to broaden their movie interests. All subscribers will be impacted by that change.
MoviePass CEO Mitch Lowe, a former Netflix and Redbox executive, did not make mention of the big changes that emerged on the platform this week when he spoke to PYMNTS two weeks ago in response to analyst allegations that the company is losing money with an unsustainable model. Lowe did tell Karen Webster that MoviePass is a platform that is always updating and improving its offerings in an effort to expand monetization opportunities, including building services around the notion of a “night out at the movies.”
For example, Lowe said that plans include making it easier for a subscriber to purchase a companion movie ticket through the app, since 60 percent of subscribers go to the movies with non-subscribers. He also noted plans to add a multiple-member offering.
“We are also looking to launch a couples and family package, [which] it is absolutely the most requested add-on to the service,” Lowe told Webster.
When and how those development will happen, or if they are still on the menu, remains to be seen.
Zelle’s Security Blues
Zelle, according to some reports, has hit a bit of a security speed bump as stories emerged that hackers have used the service to clean out users’ bank accounts.
The P2P payments services was a move by banks to stay current and caught up with the major tech players who have planted a flag in P2P payments (PayPal/Venmo) or that are attempting to do so (Apple).
But The New York Times ran a report last week featuring interviews with more than two dozen customers who claim to have had their money stolen through Zelle.
The main problem at hand, according to the NYT report, is that Zelle does not always notify customers when money is transferred. That, combined with the fact that some banks implemented Zelle without first adding strong authentication and fraud protections, made the system vulnerable to hackers, according to Genevieve Gimbert, a partner in PwC’s financial crimes unit.
And though some customers who lost money through fraudulent transactions were reimbursed by their financial institutions, others were not so lucky.
Zelle, however, says the problem is under control.
“There are very few incidents,” said Lou Anne Alexander, Early Warning’s head of payments. “When there is a problem, we and the banks are proactive. It’s not something we’re putting our heads in the sand about.”
Zelle has previously reported that it signed up 100,000 customers per day for each day of 2017 and processed more than 247 million payments last year for a total of $75 billion. That would mark an increase of 45 percent from 2016. In 2016, that number was $55 billion.
LendingClub Faces FTC Lawsuit
LendingClub’s stock hit a low last week when news broke that it is being sued by the FTC over claims of adding hidden fees and double charging borrowers.
LendingClub’s stock fell 14 percent to $2.80 a share, off 32 percent so far this year. Since its initial public offering, LendingClub’s stock has declined 88 percent.
Reports indicated the Federal Trade Commission (FTC) contends the company’s behavior violated federal laws that protect consumers from deceptive and unfair practices — and often caused consumers considerable financial hardship.
“Many consumers are forced to pay overdraft fees, while other consumers are unable to pay other bills because they do not have access to the money that defendants improperly withdrew,” the FTC said in its lawsuit.
The FTC contends that despite LendingClub’s promises not to hit borrowers with hidden fees, it has extracted hundreds of dollars — and in some cases thousands of dollars — in fees from its loans. Moreover, the lawsuit alleges that LendingClub withdrew double payments from customer accounts at times and charged (and removed funds from) consumers who had already paid off their loans.
“This case demonstrates the importance to consumers of having truthful information from lenders, including online marketplace lenders,” said J. Reilly Dolan, acting director of the FTC’s Consumer Protection unit. “Stopping this kind of conduct will help consumers make informed choices about loan offers.”
LendingClub has responded by noting the millions of people it has helped access to low cost credit. The firm also told media outlets that it is deeply committed to transparency in its dealings and fee structure.
“The allegations cannot be reconciled with this long-standing record of consumer satisfaction that’s reflected in every available objective metric,” LendingClub noted in their official reply.
How will all these resets turn out?
We’ll keep you posted — have a good week.