Netflix's password sharing crackdown already causing confusion - report

Netflix screenshot
Differing charges "could be considered a way of discriminating against users arbitrarily". Photo credit: Getty Images

Netflix's crackdown of sharing account passwords is already causing confusion amongst consumers, according to a new report.

The streaming giant announced in March it was trialling changes in Chile, Costa Rica and Peru to "understand the utility" of charging extra for members to share passwords before making changes elsewhere.

Members "may be prompted to verify their account only if a device outside of their household logs in to the account" the company said at the time.

But according to a report on website Rest Of World, a lack of transparency and information is causing issues for subscribers.

Some users decided to cancel their Netflix subscription completely, reportedly then choosing to give their money to other streaming companies, while some are happy to pay to share.

Others say they are continuing to share passwords with family and friends, with the company saying the policy was "progressive" with different versions being tested across all three countries.

That has raised some red flags for consumer protection agencies, with representatives from all three agencies meeting with Netflix, according to the report.

A press release from Peru's consumer rights agency, the National Institute for the Defence of Free Competition and the Protection of Intellectual Property (Indecopi) suggested Netflix had to clearly define what a "household" was.

Some subscribers took that to mean close family was included, even if they didn't live in the same property, while the company says it refers to people living in the same building.

Indecopi also said that differing charges caused by the policy "could be considered a way of discriminating against users arbitrarily", although an investigation would be needed to confirm that.

Confusion also exists amongst Netflix employees, Rest of World reported.

A customer service representative, speaking on the condition of anonymity, told the site that they didn't know what to say when asked about the policy change.

"She was instructed that if a subscriber called arguing that someone from their household was just using the account from another location, she should inquire further and tell the subscriber that they could use their account without extra charge via a verification code," the website said.

"The anonymous Netflix employee herself still shares her account with friends outside her household and has yet to be notified of any extra charges."

Chengyi Long, director of product innovation at Netflix, had previously said sharing accounts between households was impacting the company's ability to invest in new movies and television shows.

"We've always made it easy for people who live together to share their Netflix account, with features like separate profiles and multiple streams in our Standard and Premium plans," she said.

"While these have been hugely popular, they have also created some confusion about when and how Netflix can be shared."

The company is under pressure to find new revenue after announcing in April that inflation, the war in Ukraine and fierce competition had all led to a loss of subscribers.

In the first quarter of 2022, it lost 200,000 users, the first time in more than a decade it had failed to gain new subscribers. It had forecast adding 2.5 million subscribers, it said.

There has been no indication if or when the password crackdown is likely to be widened to include New Zealand.