Peak Fitness will also pay the Attorney General’s Office $30,000 for consumer education and investigative costs.
"Many people are making New Year’s resolutions to lose weight or get in shape by joining a gym,” Attorney General Roy Cooper said. “We want to make sure that people get what they pay for and that health clubs treat their members fairly.”
According to a news release from the Attorney General's Office, the judgment requires Peak Fitness to:
- Designate a single point of contact to handle all consumer complaints, concerns and questions and post contact information clearly in all Peak Fitness clubs, on all Peak Fitness web sites, and on all customers’ contracts.
- Clearly post contact information for Peak’s billing company, ABC Financial, in all Peak Fitness clubs, on all Peak Fitness web sites, and on all customers’ contracts, and provide a working fax machine in all Peak Fitness clubs for cancellations and correspondence with Peak Fitness.
- Purchase and maintain appropriate bonds for each health club it operates in North Carolina. Bonds can be used to pay refunds to members if the club shuts down.
- Not sell memberships to any club more than 180 days before it will open.
- Notify the Attorney General’s Office before entering membership contracts for clubs that have yet to open, purchase a bond of at least $10,000 for the club, and give consumers written notice of their extended three-day right to cancel their contracts.
- Give advance notice to gym members and the Attorney General’s Office when a health club will be closed or when members will be transferred to another location.
- Provide pro-rated refunds to any customer who purchases or renews a membership to a club that then closes within 90 days.
- Make sure all membership contracts are fully completed and signed, include a specific time period for the membership measured in years or parts of a year, contain a full statement of consumers’ right to cancel the contract within three days of signing it, and contain a full statement of their right to refunds.
- Clearly explain that automatic renewal of memberships is optional.
- Pay pro-rated refunds when members move more than eight miles from the club or more than 30 miles from any Peak Fitness location or are no longer able to use the facilities because of death or disability.
- Honor lifetime contracts purchased prior to 1980 at health clubs now owned by Peak Fitness. Consumers who allowed their lifetime contract to lapse or otherwise entered a replacement contract with Peak in 2008 have 60 days to contact Peak to get their lifetime contract reinstated.
The consent judgment also bars Peak Fitness from making any false or misleading statement to consumers. Peak may not tell members that they can cancel their contracts at any time, that a club will not close, or that a new club will open unless it is true.
Late Thursday, Peak Fitness issued a statement on the settlement:
"Peak Fitness is committed to providing the highest quality service. The centers have committed nearly half a million dollars to improve technologies and staffing to meet the needs of over 100,000 members. Peak Fitness strives to achieve a 100% customer approval rating. Currently we are at 99.7%. Although we are proud of that level of service, we continue to strive towards perfection and 100% approval ratings," said spokesperson Ken Hanley.
