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In context: All business have to deal with fraud. Whether it's shoplifting or gaming the system, both the business and its patrons end up paying the price. Movie subscription service Sinemia has taken a proactive stance on fraudulent use of its service and recent cancelations are a result of that.
A few weeks ago we reported how users of the movie subscription service Sinemia took to Twitter complaining that their accounts had been unjustifiably closed. At the time, the company curtly explained that the terminations were over fraudulent activity.
On Friday, Sinemia clarified the situation.
"After conducting a detailed fraud and misuse detection analysis earlier this month, Sinemia has made the decision to drop a small number of user accounts for fraudulent activity and/or misuse of the service," Sinemia claims in a statement emailed to TechSpot.
It was initially thought that it was an automated fraud-detection system that was erroneously flagging innocent accounts. However, the company says that the canceled subscriptions were verified to have been used fraudulently. Some of the terminations were a result of customers misusing the Sinemia debit card, which is only to be used for ticket purchases.
"The vast majority of our subscribers are using Sinemia as intended: to enjoy more affordable movie tickets as part of their individual or family plans. However, since the beginning of March, Sinemia has removed approximately 3 percent of its accounts due to misuse or fraudulent activity."
Examples of misuse the company provided include using the Sinemia card for purchases other than movie tickets like concessions or online purchases, using multiple accounts on the same device or for one person, and not checking in at the theater before or after the movie.
Sinemia says that the cancellations account to only about three percent of its total client base. This fraction is a much lower fraud rate than MoviePass, which claimed about 20 percent of its users were abusing the system.
"When fraud is allowed to run rampant, it can take down an entire business, a scenario in which everyone loses," it 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 company also said that it notified all affected accounts explaining the reasons for the termination and issued them a prorated refund for the unused portion of their subscriptions.
Fraudsters are always going to scream innocence, and three percent does seem like a low number for a system that is partially based on the honor system. Sinemia appears to be looking after its honest customer base in this instance. If it were just making guesses at questionable activity, it would seem the number of affected accounts would be higher.