01."No contract" means "no contract"
The Australian Competition and Consumer Commission (ACCC) has set its sights on gyms that advertise bogus "no contract" memberships, which do actually involve contracts.
"Gyms should not use attention-grabbing phrases like 'no contracts' if they are misleading or deceptive," ACCC deputy chair Dr Michael Schaper said. "If a customer sees an offer of 'no contracts', there should be no conditions on terminating the service or further payments required."
The regulator, which has been embarking on a flurry of activity of late, has put the fitness industry "on notice" for misleading advertising.
Several gyms have already had to drop their no contract claims, and the ACCC says it will continue to monitor others.
"The ACCC understands that using the phrase 'no contracts' may be an attempt by some gyms to distinguish their short-term membership offerings from gyms which offer long-term memberships. However, using the phrase does not provide consumers with clarity regarding this distinction," Mr Schaper said.
Gym contracts are notoriously problematic. Many gyms require customers to commit to costly memberships and a past CHOICE investigation revealed that some use aggressive sales techniques to sign members up and even more aggressive techniques to try and keep them on.
Advertising of 'no contracts' that could be misleading
The ACCC says it is likely to be misleading for a gym to claim "no contracts" in advertising when:
- consumers actually have to sign a membership agreement that stops them from being able to cancel at any time
- consumers have to make a non-refundable advance payment for a certain period of time
- a written notice of termination is required by the gym for a consumer to end their membership, and if that notice isn't given, they have to keep paying
- a consumer must make payments during a notice period.
ACCC has acted on gyms before
Genesis Fitness Club Berwick paid ACCC's first infringement notice for carbon claim. The ACCC believed that that the club did not have a reasonable basis for claiming the carbon price would increase the cost of gym memberships.
Fitness First provided ACCC with an undertaking after their promotional flyers said it cost a "gold coin" to join the gym and said an administration fee was payable on joining but failed to specify, in a prominent way and as a single figure, the single total price for the membership.