The spectacular losses that slammed MoviePass last summer were made even worse by theaters that used sneaky tactics to take advantage of its bottomless film buffet, sources told The Post.
The cash-strapped subscription service — whose $10-a-month, all-you-can-watch deal drew a feeding frenzy that spurred a $127 million quarterly loss last summer — also might have been affected by movie theaters that overcharged MoviePass customers and, in some cases, enlisted their own employees in elaborate schemes, sources said.
Two movie theaters — Williamsburg Cinemas in Brooklyn and 8K Cinemas in Northern California — allegedly found ways to squeeze roughly $300,000 out of the service, according to sources close to the situation.
Reached for comment by The Post, MoviePass stated that the allegations against the two theater operators were accurate, but declined to comment further.
Between August 2017 and July 2018, Williamsburg Cinemas overcharged users who purchased tickets using their MoviePass cards, sources claimed. Photos and a video obtained by The Post show Williamsburg Cinemas’ ticket kiosks charging $9 for a standard adult ticket and $12 for MoviePass customers.
During a recent visit, The Post confirmed that the kiosks at the cinema are the same as those in the video, but it appears that the price of a MoviePass ticket has now gone back to $9.
During the course of its alleged yearlong scheme, Williamsburg Cinemas racked up roughly 30,000 fraudulent transactions, costing MoviePass about $90,000, according to sources. The practice only ended, sources say, after MoviePass contacted the theater and told it that it was aware of the situation.
Williamsburg Cinemas, which is still available for MoviePass subscribers, didn’t respond to repeated phone calls and e-mails seeking comment.
“If they didn’t respond, then that’s your answer,” a bearded, baseball-cap-wearing manager at Williamsburg Cinemas told a Post reporter who visited the theater last week.
At 8K Cinemas in California, a theater chain that focuses heavily on Bollywood movies, the alleged schemes took a different approach, sources said.
MoviePass typically doesn’t allow the Indian movies on its service because they’re so lengthy and carry higher ticket prices. To get around that rule, sources believe that 8K theaters would check customers into an eligible, regular-priced film, then ask them to pay the remaining balance separately.
That “split transaction” is also explicitly forbidden by MoviePass, according to the company’s terms and conditions of service.
“We did not encourage anyone to do split transactions, but a few transactions might have gone through,” an 8K manager named Raman Sanchula told The Post in an e-mail. “But those numbers are very minimal.”
The Post’s sources estimate that of the 23,000 tickets MoviePass purchased for its customers at 8K Cinemas during the life of the alleged scheme, 70 percent of them were for a non-eligible movie, spurring $200,000 in losses for MoviePass. The practice only ended after MoviePass booted 8K Cinemas from its roster of eligible theaters.
Sources also pointed to evidence that 8K enlisted its own employees to sign up for MoviePass and swipe their cards on low-traffic showtimes each day, thus pumping more money into its bank accounts, according to sources.
Asked about the allegation, Sanchula said the chain only had a “few employees.”
“I am not sure how many have signed up for MoviePass,” Sanchula said. “I don’t think their claim is correct.”
He added that MoviePass owes 8K $400,000 and that the payment dispute has been referred to a lawyer, but declined to explain why. Sanchula has not responded to The Post’s requests to speak with his lawyer to discuss the details of his claim. MoviePass declined to comment on the allegation that it owes 8K money.
The behavior allegedly exhibited by Williamsburg and 8K Cinemas represents just a fraction of the schemes that MoviePass has claimed have hit its business.
In a previous interview with The Post, Ted Farnsworth, chairman of MoviePass parent company Helios and Matheson, said most of MoviePass’ tens of millions of dollars in losses resulted from user fraud, not from theaters.
MoviePass customer abuses last summer included buying tickets for friends and family not on the plan and, in some cases, buying a movie ticket just “to go to the restroom in Times Square,” Farnsworth said last month.
That’s despite the fact that most analysts agree the company’s overly generous offer of a movie a day for $10 a month was already a recipe for financial disaster when it was first introduced in August 2017.
MoviePass also declined to comment on what, if anything, it was doing to ensure that more theaters aren’t taking advantage of its service as it rolls out its latest “Uncapped” plan, which will once again allow users to see a movie a day for $9.95 per month.
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