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MoviePass ran out of money Thursday, couldn't afford to pay for customers' tickets

<p>When <a href="https://www.newsy.com/stories/moviepass-offers-10-month-movie-ticket-subscription-service/" target="_blank">MoviePass entered the market</a>, people wondered how a company could make any money selling a month's worth of movie tickets for $10. MoviePass later explained how: It sells subscribers' personal information to advertisers. Now, CEO Mitch Lowe has taken the rare step of revealing exactly what information MoviePass is selling.</p><p>MoviePass <a href="https://www.mediaplaynews.com/ceo-mitch-lowe-says-moviepass-will-reach-5-million-subs-by-end-of-year/" target="_blank">uses GPS technology</a> from its app to collect users' addresses, demographic information and even the routes they take to get to and from the movies. It then sells that data to advertisers, who push for subscribers to visit restaurants or other vendors before or after a film. If a user goes and spends money, MoviePass gets an additional cut.</p><p><b>SEE MORE: <a href="https://www.newsy.com/stories/moviepass-offers-10-month-movie-ticket-subscription-service/">Can The MoviePass Model Of Unlimited Tickets For $10 Per Month Last?</a></b></p><p>The practice of collecting this information is known as <a href="http://www.newsweek.com/secretive-world-selling-data-about-you-464789" target="_blank">data brokerage</a>, and companies everywhere use it to categorize consumers into specific subgroups that advertisers can target. Some of those categories are simple, like whether someone is a pet owner. But other categories are <a href="https://www.npr.org/sections/alltechconsidered/2016/07/11/485571291/firms-are-buying-sharing-your-online-info-what-can-you-do-about-it" target="_blank">more invasive</a> — like whether someone has <a href="https://jezebel.com/5941850/how-does-facebook-know-youre-pregnant" target="_blank">recently gotten pregnant</a>, whether they're poor or whether they pay bills on time.</p><p>The practice is so widespread, even governments get involved. In 2011, the state of Florida made $63 million by selling people's names, addresses, dates of birth and lists of the vehicles they drive to two prominent data brokers. </p><p>But MoviePass has been less secretive than some other companies in how it collects and sells data. For instance, while Facebook does have its data policy <a href="https://www.facebook.com/full_data_use_policy" target="_blank">in full on its website</a>, it's also been accused of buying third-party data about users' offline activities without telling them what it purchased.</p><hr><b>Trending stories at <a href="http://www.newsy.com">Newsy.com</a></b><ul class="inline-related-links"><li><a href="http://www.newsy.com/stories/5g-technology-could-change-neighborhoods/">How 5G Technology Will Change Your Neighborhood</a></li><li><a href="http://www.newsy.com/stories/google-is-facing-scrutiny-lawsuits-about-company-inclusion/">Google Lawsuits Show 'Diversity' No Longer Has One Definition</a></li><li><a href="http://www.newsy.com/stories/supreme-court-hears-microsoft-email-privacy-case/">Supreme Court Hears Microsoft Email Privacy Case</a></li></ul>
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MoviePass is on life support.

Helios and Matheson, the parent company of the popular movie subscription service, said that it had a service outage on Thursday because it couldn't afford to pay for movie tickets. The company borrowed $5 million in cash Friday to pay its merchant and fulfillment processors, according to a regulatory filing.

Helios and Matheson missed a payment to one of its fulfillment processors, and that contractor temporarily refused to process payments for MoviePass.

Some customers complained on social media Thursday that they couldn't use their MoviePass accounts to purchase movie tickets at theaters.

The company hasn't said whether MoviePass has resumed operation. But in a tweet late Thursday, MoviePass said that it recommended that users wait for a resolution or use e-ticketing, which it said had not been affected.

Stock in Helios and Matheson, meanwhile, tanked Friday from nearly $7 at market open to $3.58 by mid-morning.

The company approved a reverse stock split earlier this week to boost the price from 8 cents to $21 in an effort to keep it from falling off the Nasdaq stock exchange.

The price has been in freefall ever since. If valued at its pre-split amount, Friday's price would be equivalent to about 1.5 cents.

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