Gym junkies angry over contracts

JENNY KEOWN

Upset gym-goers who believe they were misled when signing up to gym contracts are applauding the Commerce Commission's warning shot to the industry over its practices.

The competition watchdog yesterday said many gyms were breaking the Consumer Contracts and Consumer Finance Act and face court fines of up to $30,000 if they don't shape up.

At the heart of the commission's concerns were gym contracts paid by instalment and subject to fees or interest - known as consumer credit contracts.

Its investigations revealed many gyms failed to advise customers of their statutory right to cancel the contract, and when a client signed up, failed to disclose the full membership cost of the minimum period.

Former gym enthusiast Hayley Young said she was only 17 when she signed up for her gym membership, and wasn't told that she would be liable to pay for a mandatory contract period of two years.

Ms Young lost her job and couldn't afford to carry on paying for the rest of her contract term but was told she didn't have much of a choice.

"They took me to the debt collectors for about $3000. I was very upset by it all."

Gym-goer Justin Cook was angry at the way he was treated by Club Physical and its partner Debitsuccess, when he gave notice of cancellation of his six-month membership just before the end of the contract period.

"They tried to tell me that a direct debt constituted a binding contract when I gave notice, and insisted that I was unable to get out of the contract for another two months,'' he said.

''It seemed like they were out to get money regardless of the reality of the situation or what was ethically right.''

Club Physical chief executive Paul Richards said among its 13,500 members there were bound to be unhappy customers, but said he would look into Mr Cook's  experience.

"The thing is people come to the gym and want to slim their waists and have smaller stomachs, but get lazy, realise they are wasting their membership and want to get out of it. Then suddenly you become the bad guys.

"I think 99.9 per cent of gym owners are nice people who are passionate about training and teaching people to keep fit."

Debitsucces said when the Credit Contracts and Consumer Act came into effect in April 2005, it took legal advice to ensure its contracts were compliant.

Industry body Fitness New Zealand chief executive Richard Beddie said when the CCCF Act came into force it worked extensively with the industry to make sure they were compliant.

The act doesn't stop gyms giving credit, it's about full disclosure of what's involved, he said.

Many of the major gym chains don't charge for the cost of credit, he said, which the industry body was encouraging other gyms to adopt. "So, for instance, the cost of paying weekly instalments for a 12-month contract would be the same as if you paid it in full when signing up," he said.

The commission investigated the gym membership contracts of 13 randomly selected gyms around the country after receiving complaints from customers who tried to cancel their memberships.

All except one of the contracts investigated were likely to breach the CCCF Act, said the commission.

Failure to comply with the disclosure provisions of the CCCF Act could make the contract unenforceable and an attempt to enforce the contract might also breach the Fair Trading Act. Breaches under the Fair Trading Act can result in a fine of up to $200,000 for a business and up to $60,000 for an individual.

The Commerce Commission's competition branch manager Graham Gill said he suspected thousands of people across the country may have entered into contracts that breached the act.

''We have encouraged the gym industry to seek legal advice and put this matter right urgently. If they don't do so, the commission may take enforcement action in the future.''

Consumer New Zealand adviser Paul Dooceynts said complaints about gym memberships had been a perennial issue.

It was likely many gyms were not aware they were covered by the act, but that was no excuse. ''A lot of these gyms seem to have memberships managed by specialised companies . . . we're not talking about some kind of hurried personal fitness instructor that is trying to manage the finances.''

Exodus Gym general manager Gary Cottle said he had not been contacted by the commission but would be happy to follow any guidance from it or from Fitness New Zealand.

He believed his members were happy with their memberships and knew the details of their contract, but any advice was good advice.

''I suppose at the end of the day we've never had a complaint, but that doesn't mean everything has been done 100 per cent correctly.''

 

- © Fairfax NZ News