Sinemia, the movie subscription service in direct competition with MoviePass, surprised customers by cancelling a number of accounts, according to a report by TechCrunch.
“Sinemia is a FinTech company in the entertainment industry. Just like any other FinTech company, Sinemia also faces its own challenges of fraud,” the company said. “After conducting a detailed fraud detection analysis earlier this month, Sinemia has terminated a very small number of user accounts for fraudulent activity and misuse.”
The statement said that 99 percent of users aren’t affected and that it would offer “full refunds of the difference between their membership payment (and) fees and ticket purchases” for those who were.
On Friday (March 29), the company announced that it was offering a $15 monthly plan called the Always Unlimited Plan, which lets customers see one movie a day. With the plan, the company released a statement about the account cancellations.
Sinemia said it did “a detailed fraud and misuse detection analysis earlier this month,” and that it got rid of 3 percent of accounts due to “misuse or fraudulent activity,” since March, which is a larger number than what it said earlier.
“When fraud is allowed to run rampant, it can take down an entire business, a scenario in which everyone loses,” the company said. “It’s critical that all our customers use the service correctly and that we take fraud and misuse seriously. This kind of vigilance helps us combat misuse, ensuring all our customers continue to enjoy movies at affordable and sustainable prices.”
The fraudulent activity, while not spelled out, could be due to the sharing of accounts.
Ted Farnsworth, CEO Helios and Matheson Analytics, which owns MoviePass, discussed that issue in the report. “They would share their code,” Farnsworth told the news outlet. “You’d have one person going to 20 movies a month, 30 movies a month. Which you know and I know, as much as we like movies, most people aren’t going to 30 movies a month.”
He said MoviePass fraud could be as high as 20 percent.
Sinemia customers have also complained about hidden fees, and the issue was big enough that a class action lawsuit was filed against the company.
“Sinemia, however, has essentially become a bait-and-switch scheme: it lures consumers in by convincing them to purchase a purportedly cheaper movie subscription, and then adds undisclosed fees that make such purchases no bargain at all,” the suit, filed in Delaware, alleges. “Sinemia fleeces consumers with an undisclosed processing fee each time a plan subscriber goes to the movies using Sinemia’s service.”