So, where does all this leave MoviePass subscribers, some of whom are being charged on a month-to-month basis, while others are locked into annual subscriptions that required an upfront payment? CNBC Make It asked Omri Ben-Shahar, a professor at the University of Chicago Law School who specializes in contract law and consumer protection some of the questions on MoviePass users' minds.
What can you do about all those changes MoviePass keeps springing on users, like higher prices and blackouts?
MoviePass's latest price change (to take effect within 30 days, according to the company) and blackouts (some new release movies will have limited availability during their first two weeks in theaters) are just the latest in a string of tweaks the company has made to the terms and conditions of its subscription plan, which some customers have deemed a "bait and switch." In recent months, MoviePass also suddenly announced changes such as the introduction of "peak pricing," where users have to pay an additional fee to book tickets to certain high-demand movies, or only allowing subscribers to see each movie once.
The MoviePass terms of service are somewhat vague with regard to service outages or movie blackouts. But the contract does note that future subscription plans may include premium or "capped plans" that could limit the movies a user sees per month, and the terms also include a disclaimer notifying users that MoviePass "does not promise that the site or any content, service or feature of the site or service will be error-free or uninterrupted, or that your use of the service or site will provide specific results."
Ben-Shahar, who looked over MoviePass' latest terms of service, found that the company says it essentially has the right to change or modify its service at any time in its sole discretion, including prices "without prior notice." The law professor notes that just because that language is in the contract, that doesn't mean MoviePass can simply change the nature of its service dramatically, or without limit — courts often side against companies that change the terms of a deal without properly notifying customers or giving them a reasonable opportunity to drop their subscription.
"There needs to be some ability for consumers to either reject that proposed change or to terminate the service without undue burden or any cost," Ben-Shahar says.
Of course, MoviePass could have some protection in that case, as users are typically made aware of changes to their plans by an e-mail or a notification in the MoviePass app. However, Ben-Shahar argues that, unless MoviePass gets "express, fresh agreement from the consumer" to continue with the plan in light of any new changes, then users might have a legal argument to end their subscription early.
"Consumers have to have a meaningful choice, in the sense that, if a consumer wants to say 'No, I don't want to do this,' then, MoviePass says, 'OK, then you can't continue.' And, the consumer has to be able to quit the service without excessive burden or cost," Ben-Shahar says.
Will users get their money back if MoviePass files for bankruptcy or goes out of business?
Don't hold your breath.
The law professor warns that MoviePass subscribers should not hold out too much hope for a reimbursement or some other type of settlement payment should MoviePass eventually stop operating due to a lack of funds. Obviously, that would mean the company had broken its contract with its subscribers, but it would also mean MoviePass would likely not have the money to settle its debts with anyone, including subscribers who have time left on their plans.
"If they are going to close up shop and no money is left, then consumers are screwed, the employees are screwed, the banks are screwed, the investors are screwed," says Ben-Shahar.
If MoviePass files for bankruptcy, it probably wouldn't "have any assets, and the only people who would get anything would be the bankruptcy lawyers," Ben-Shahar says.
What about all the customer service problems?
MoviePass has an "F" rating on the Better Business Bureau (BBB). The rating is based on 13 factors, including 1,837 complaints filed against MoviePass and failure to respond to 72 complaints filed against its business. It is not a BBB accredited business. To be an accredited BBB business, the business must apply for accreditation and is then evaluated on whether it meets BBB accreditation standards including, "a commitment to make a good faith effort to resolve any consumer complaints."
Among the pattern of complaints over billing and fulfillment issues, the BBB says that a large amount of consumers have alleged that they are not shipped their membership cards in a timely fashion, despite being charged for the subscription service as soon as they sign up, and are essentially ignored by MoviePass after attempting to contact the company's customer service department.
Indeed, MoviePass customers have expressed severe frustrations over the service's lack of customer response. On Twitter, customers recently aired grievances over not being able to use MoviePass for most showings of "Mission: Impossible — Fallout," which was by far the highest-grossing movie of the past weekend at the domestic box office. There is even a Twitter account dubbed "MoviePassClassAction," which is described as an account "collecting information on MoviePass business practice for an impending class-action suit."
The company's BBB profile is also plagued with negative customer reviews; 269, to be exact. Meanwhile, it boasts 41 positive reviews and one neutral review to comprise its 311 total customer reviews.
"Like many young companies, MoviePass failed to make customer service a high enough priority, and it appears that they were not prepared for the rapid growth that they have experienced. It's a good cautionary tale for hungry young businesses…you absolutely cannot skimp on customer service or you will end up with unhappy consumers, poor ratings, and bad publicity," BBB national spokesperson Katherine Hutt tells CNBC Make It. "It's not too late for MoviePass to fix this, and BBB is always happy to work with companies that want to improve their customer service."
According to law professor Ben-Shahar, while frustrating, poor customer service alone is not cause for a lawsuit, but legitimate complaints, like being billed for services that have not been provided, could form the backbone of a valid legal action.