MoviePass' CEO explains why a 'small percentage' of accounts were terminated, and how to make sure it won't happen to you

• MoviePass CEO Mitch Lowe explained why a "small percentage" of MoviePass subscribers were terminated in the beginning of February.
• Lowe addressed the customer service issues the company has been dealing with since its gigantic increase in subscribers.

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In the beginning of February, a "small percentage" of MoviePass subscribers were startled to find an email in their inboxes from the app announcing their accounts had been terminated. The reason: They had allegedly violated the company's terms of service.

This move led to a slew of complaints on social media by those who received the email, and many stories from those who claimed MoviePass had canceled their subscriptions without proper cause.

Since then, Business Insider has received over a dozen emails from customers who believe they should not have lost the service. Some said they had spent hours trying to get through to a customer service agent to plead their case, only to be told they either had violated the terms of service and nothing could be done, or that their request to be reactivated would be sent to another department. This led to days of waiting for the customers to learn their fate.

So why did MoviePass delete accounts, and what do customers need to do to make sure they never get flagged by the app?

Business Insider had a phone call with MoviePass CEO Mitch Lowe to get answers.

Trying to kick out those that are taking advantage of MoviePass

Lowe said MoviePass started terminating accounts after it found a group of repeat offenders who consistently violated MoviePass' terms of service. The violations were found by a loss prevention team Lowe hired, and included users checking in for a basic 2D ticket but then getting a 3D, RealD, or IMAX ticket; using MoviePass to obtain movie-theater gift cards; or buying concessions along with a ticket, according to Lowe.

Lowe said these overcharges "cost a lot of money" for MoviePass to cover.

The reason why the MoviePass MasterCard is able to buy more than a 2D movie ticket, Lowe explained, is because MoviePass always keeps more than a 2D ticket price on the card just in case a movie theater suddenly raises the price. That way the MoviePass customer won't get shut out of a movie they are allowed to see with the app.

"We're trying to run a business, we offer a great service at an amazing value, and you have a small percentage of people who are taking advantage of us to the detriment of our customers who are enjoying the service," Lowe told Business Insider.

Lowe pointed out that MoviePass even sent out a warning email a month ago to some of the customers who were part of the group of accounts terminated in the beginning of February. The warning said they had been violating the terms of service and if they continued to do so, their accounts would be canceled.

However, Lowe did admit that upon further review, MoviePass found not all of those accounts were terminated due to the fault of the customers. The aftermath has highlighted that MoviePass needs to have a better relationship with movie theaters and improve its customer service.

Making inroads with movie theaters and winning back customers

A majority of the MoviePass customers who contacted Business Insider had similar theories for why their accounts were flagged: They all bought tickets at the box office (rather than a kiosk) and a theater staff member did not know how to properly run the transaction.

This has occurred in numerous ways. One example given was the box office combining the charge of the MoviePass subscriber and non-MoviePass patron with them, causing the MoviePass subscriber's account to look like it went over its allowed total. Another was a situation when the theater's box office was also the concession stand, and the theater staff combined both the MoviePass charge and the concession.

Some theaters that accept MoviePass have caught onto this happening and have taken steps to better educate their staff and patrons.

In fact, one customer sent Business Insider a photo of the sign their local theater has put up to help remind MoviePass customers how to correctly use it.

"I know for a fact theaters are taking advantage of the customer in this scenario," Lowe said.

Lowe stressed that despite having a MoviePass subscription - which means with the service you get to see one movie a day per month - you should look at your theater receipt to make sure your charge is done properly by your theater.

And to help theaters better understand how to accommodate MoviePass subscribers, Lowe said he'd hired on four additional staff members to MoviePass' movie theater relations team. He also said MoviePass would have a presence at April's CinemaCon, the annual movie theater convention, in hopes of improving its relationship with theater owners.

"We need to do a good job in better communicating to the exhibitor community so they can help us help their customers," Lowe said.

But what happens if a MoviePass subscriber realizes they were overcharged? What are they supposed to do so MoviePass doesn't terminate their account?

The logical answer would be to call MoviePass customer service, but since the app changed its price plan to $10 a month, its customer service has been overwhelmed by new subscribers. If you take a glance at the MoviePass social media accounts, you will notice they are flooded with complaints from subscribers who can't get through to anyone in customer service.

However, Lowe is confident that is about to improve.

"We are not fulfilling quickly the customer service demand and a lot of that is because we were not working with the right provider nor had the right team in place," he said. "And we have just recently put in a new leader in that group and brought in a new provider that is essentially starting this week. We're making some big improvements."

Lowe said the company's revamp of its customer service includes having over 100 full-time customer service reps on the team.

"It's definitely not something I'm proud of," Lowe said of the customer service woes. "It's just not been as easy as throwing bodies at it. It's a combination of a lot of different things. But I feel very good about our new direction and its ability to create a much better experience for our customers."

And it starts with reactivating the customers who had their accounts deleted but had legitimate excuses for charges larger than their allotted amount per-movie.

Lowe said that roughly 10% of the members terminated in early February have been reinstated.