December 3, 2009

Attorney General Corbett announces settlement with Chester County health club; urges consumers to report problems with sudden gym closures

HARRISBURG - Members of a suburban Philadelphia gym may be entitled to partial refunds as part of a consumer protection settlement filed this week by the Attorney General's Bureau of Consumer Protection involving Gold's Gym of Exton, which was accused of using improper contracts and other violations of the state's Health Club Act.

Attorney General Tom Corbett said the settlement agreement, known as an Assurance of Voluntary Compliance (AVC), was reached with Exton, PA Gym LLC, doing business as Gold's Gym of Exton, along with Kenneth B. Lehman, of Langhorne, who serves as the company chief operating officer and vice president.

Corbett said that Gold's Gym of Exton sold health club memberships requiring a one-year commitment without first registering the club with the Attorney General's Office; used membership contracts that did not comply with state law; and accepted payments in excess of the first month's dues in violation of the Health Club Act.

"Health club memberships can be expensive investments for consumers," Corbett said. "The Health Club Act was created to ensure that consumers get clear and accurate information about their membership agreements up-front, before they make a purchase.

Corbett said the settlement agreement requires Gold's Gym of Exton to give approximately 1,400 consumers the option of signing a new contract, which complies with the Health Club Act, or cancelling their existing contract and receiving a refund for the unused portion of their health club membership. 

Additionally, the AVC requires Gold's Gym of Exton to revise its health club contracts and payment collection procedures to comply with the Health Club Act; register all fictitious business names with the Pennsylvania Department of State; and pay $3,000 in civil penalties along with $2,000 for future consumer education and consumer protection activities.

The Assurance of Voluntary Compliance was filed in Chester County Court of Common Pleas by Deputy Attorney General Jacqueline M. D'Angelo of the Attorney General's Bureau of Consumer Protection.

On a related note, Corbett said the Bureau of Consumer Protection has been alerted to the recent closing of another health club owned and operated by Mr. Lehman - Gold's Gym of Oaks, located in Montgomery County. 

The Health Club Act allows clubs that close to transfer their memberships to a comparable facility within 10 miles of the original location, however, members who joined within 30-days of the closing are entitled to cancel their contracts and receive refunds. 

Consumers with questions or complaints involving Gold's Gym of Exton, Gold's Gym of Oaks, or other health clubs operating in Pennsylvania, are urged to contact the Attorney General's Bureau of Consumer Protection.

Consumers can call the Attorney General's Consumer Protection Hotline at 1-800-441-2555 or use the Attorney General's website to file an online consumer complaint at: www.attorneygeneral.gov  (Click on the "Complaints" button on the front page of the website and select "Consumer Complaint Form" from the menu list).

Health Club Act

Corbett explained that Pennsylvania law requires health clubs and gyms to register with the Attorney General's Bureau of Consumer Protection office if they offer contracts of three-months or longer.  Additionally, any health club or gym selling memberships lasting more than one-year, or clubs that collect more than three-months of membership dues in advance, must file a letter of credit or bond with the Attorney General's office.  The bond or letter of credit is intended to protect consumers from financial losses if a club closes before their pre-paid memberships have ended.

Corbett said that the state's Health Club Act also allows consumers to cancel their gym or health club contracts in certain situations.  Any health club contract can be cancelled within three business days of signing the contract, providing a "cooling off period" for consumers to evaluate the contract and determine if it best suits their needs.

Corbett said that consumers also have the right to cancel health club contracts in other special circumstances:

• If a club closes for more than 30 days and a comparable facility is not provided within 10 miles of the original location.
• If the consumer moves more than 25 miles from the health club and there is no comparable club available within five miles of their new residence.
• If the consumer sustains an injury, verified by a doctor, which prevents them from using one-third or more of the health club's facilities for six months or longer.
• If a health club closes within 30 days from the start of a consumer's contract.
• If a contract contains terms or conditions that violate the Health Club Act.

When considering a health club or gym membership, Corbett suggested that consumers take the following steps:

• Shop around - compare multiple clubs in your area to be certain that their location, equipment, hours, staff and price best suits your schedule and needs.
• Read all contracts carefully before you sign - take materials home for review before making a commitment.
• Do not give in to high-pressure sales tactics - take as much time as you need to evaluate all of your options.
• Understand exactly what your membership includes, and what additional fees you may be charged for the use of special equipment, facilities, trainers, etc.
• If you are considering a long-term contract, check to see if the club has registered with the Attorney General's Office.
• If you are pre-paying for a contract, verify that the club has posted the required letter-of-credit or security bond with the Attorney General's Office.
• Ask for a tour or complimentary visit to help determine if the club suits your needs.
• Ask current members about their experience.
• Be sure the club has at least one person trained in CPR on the premises at all times.

Detailed information about consumers' rights related to health club memberships is available on the Attorney General's website.

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