Consumer Complaints Lead To Health Club Sales Reforms
Attorney General Spitzer today announced an agreement with one of the country's largest health club chains that will significantly reform its sales and advertising practices.
Bally Total Fitness Corporation, which operates nearly 40 health clubs throughout the state, settled an investigation by Spitzer's office after hundreds of consumers complained that deceptive ads and high pressure sales tactics tricked them into signing long-term contracts and misrepresented the total price of the memberships.
"People joining health clubs expect trimmer bodies, not trimmer wallets," Spitzer said. "This agreement will help consumers better understand terms and condition of their membership and get the most for their money."
The agreement requires Bally to implement substantial sales, training, and advertising reforms far greater than the law requires. In addition, the settlement requires Bally to improve its cancellation policies and better monitor its compliance with those policies. Bally also agreed to provide pro-rata refunds to certain consumers who were misled about the legally binding nature of their contract or were improperly denied the right to cancel.
Since 1999, approximately 600 individuals have contacted Spitzer's office about Bally. Consumers complaints included misrepresentations by Bally employees about the terms of the memberships insofar as whether the contract was binding or could be cancelled. As a result, individuals - many of whom had only limited proficiency in English or were young, inexperienced consumers - did not know they were signing binding three-year contracts.
Many consumers also complained that Bally denied their requests for cancellation even though they were exercising their rights under state law. Spitzer's office also received complaints concerning Bally's renewal practices and the conditions, services and facilities at some Bally clubs.
Spitzer's investigation revealed that Bally promoted its special low-rate memberships with extensive television and print advertisements that failed to disclose conditions necessary to receive the savings. For example, Bally ads enticed consumers by promoting low monthly dues without clearly disclosing other significant fees that increased the total monthly cost - such as the financing of thousands of dollars in initiation fees.
In addition, Bally's advertised discount memberships were often not renewable, were limited to a single club or specified days and had to be financed over 36-month period.
The settlement prohibits the Chicago-based company from misrepresenting the terms of its memberships and consumers' cancellation rights. In addition, the agreement specifically requires Bally to:
- Provide new members with at least a seven-day cancellation period, longer than what is required by law;
- Provide new members with a copy of their contract together with a separate handout that describes: key features of the membership purchased; the full cost of the membership; and additional costs for services, such as personal training or exercise classes, not included in the membership;
- Have a senior sales member meet with each new member to ensure that individuals understand that their contract is legally binding, to review the terms of the contract, and to ensure that consumers understand its terms, and their cancellation rights;
- Make follow-up phone calls to ensure that new members fully understand the terms of their contract and to identify potentially problematic transactions;
- Provide extensive training to employees that specifically addresses prohibited sales practices and the consequence of engaging in such practices, including possible lost commissions and termination;
- Adopt procedures for monitoring the conduct of Bally health club employees, including regular on-site inspections and random "shopping" of its New York health clubs and tracking of complaints according to individual sales representatives;
- Offer specially designated student memberships with terms shorter than Bally's typical three year membership contract;
- Provide translations of its contracts in Spanish to all consumers who negotiate the transaction at least in part in Spanish or who otherwise request a Spanish version of the contract.
Spitzer's office has successfully mediated hundreds of consumer complaints against Bally. Since 1999, the office has obtained nearly $138,000 in restitution for individuals.
The agreement, however, requires Bally to make restitution to certain consumers who did not receive refunds as a result of mediation and who were misled about the legally binding nature of their contract or were improperly denied the right to cancel, including consumers who have not yet come forward. Consumers who believe they are eligible to receive a refund must file a complaint form by April 3, 2004.
In settling the investigation, Bally agreed to pay $200,000 to the State as the costs of the investigation.
Bally's operates approximately 40 health clubs in the State of New York. In the New York City metropolitan area, there are approximately 28 Bally Total Fitness clubs, most of which are also known as Jack LaLanne Fitness Centers. In the Rochester area, Bally operates six clubs under the name of Holiday Health & Fitness Centers. In the Albany, Binghamton and Syracuse region, there are five Bally Total Fitness clubs, which are also known as Champion Fitness, and are operated by an independent franchisee.
This case is being handled by Assistant Attorneys General Jane M. Azia and Melissa Saren of the Consumer Frauds and Protection Bureau.
Individuals with questions about laws protecting them when joining a health club are encouraged to contact the Attorney General's consumer help line at (800) 771-7755.