Sinemia says canceled accounts are defense against subscriber misuse

Every time we publish a story about about MoviePass competitor Sinemia, a funny thing happens: our Twitter mentions explode. Seriously, follow the reactions to this post and see for yourself. A number of folks have had cards canceled or have otherwise inactive accounts and are understandably not psyched.

Recently, we reached out to the company and received the following statement,

Sinemia is a FinTech company in the entertainment industry. Just like any other FinTech company, Sinemia also faces its own challenges of fraud. 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 goes on to explain “99 percent” of users are unaffected, and it offers “full refunds of the difference between their membership payment & fees and ticket purchases” for those who are.

This morning, the company announced a $15 a month Always Unlimited plan, which offers users one movie a day. It’s not Sinemia’s first unlimited plan, and coming after MoviePass’ move last week to bringing back its own unlimited plan, the Sinemia announcements includes the company’s by-now obligatory digs at its competitors.

But along with the plan, the company is also releasing a statement detailing the aforementioned actions around account cancelations.

The two-page statement notes says the company conducted “a detailed fraud and misuse detection analysis earlier this month,” and has removed around 3 percent of accounts due to “misuse or fraudulent activity” since the beginning of March. It’s a larger number than the 1 percent implied earlier, but still qualities as a small portion of the overall subscriber base.

“When fraud is allowed to run rampant, it can take down an entire business, a scenario in which everyone loses,” the company says. “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.”

As for how the company defines “misuse or fraudulent activity,” there are a number of potential scenarios, including using multiple accounts on one device, purchasing tickets for others on one (non-family) account, scalping tickets and not checking in at a theater.

Those bits certainly sound similar to the fraudulent activity Ted Farnsworth discussed in a recent interview with TechCrunch. The CEO of MoviePass owner Helios and Matheson Analytics placed the company’s woes almost entirely at the feet of such activity.

“They would share their code,” Farnsworth told TechCrunch. “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.”

The executive put MoviePass subscribers’ fraudulent activity at a much higher 20 percent.

But customer complaints about Sinemia — which also include concerns about undisclosed fees — appear widespread enough to have triggered a class action suit. Filed in a Delaware court in February, the suit alleges:

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. Sinemia fleeces consumers with an undisclosed processing fee each time a plan subscriber goes to the movies using Sinemia’s service.

A Sinemia Support Twitter account (along with the standard Sinemia account), meanwhile, appears to be working overtime to address user complaints.

It’s hard to say ultimately how many accounts are impacted. But as with MoviePass’ troubles have shown, this sort of negative publicity can certainly leave a real impact on a company’s reputation.