Unfair gym contracts common

CHOICE reveals the pressure tactics gyms use to lock you into their contracts.
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  • Updated:29 Apr 2009

02.Gym contracts and your rights

Signing under pressure

CHOICE has received complaints about the aggressive sales tactics used by gyms to recruit new members – feeling pressured to sign up on the spot is all too common. While you can’t silence the gung-ho sales talk, consumers who are prepared stand a much better chance of making an informed decision, rather than buckling under pressure and regretting it later.

Most gyms insist on a sit-down interview with potential customers to gauge their goals and expectations. Dr Paul Harrison, a consumer behaviour specialist and senior lecturer at Deakin University, cautions customers to see these sessions for what they are. “Gyms want to develop a personal relationship with you – you are emotionally vulnerable and by sharing goals and aspirations it can feel like a relationship. Don’t be fooled into thinking it’s anything but fiscal.”

The British media reported more than 80% of gym members who sign up in the New Year stop going after six months, which goes a long way to explaining why many gyms are keen to lock their customers into 12-month contracts with a monthly direct debit.

Your rights under direct debit

In a recent survey by the Consumer Action Law Centre (CALC) in Victoria looking at direct debit issues across several industries, gyms came out on top for consumer complaints. CALC’s Carolyn Bond advises consumers to be on the lookout for cases where the gym membership has been cancelled, but direct debits continue. “We’ve had people who have had debits coming out of their accounts for months or even a year after they think they are no longer a member of the gym,” she warns.

Under the Code of Banking Practice, consumers hold the right to cancel any direct debit arrangements by contacting their bank directly. If you want to terminate your membership once you are out of the contracted period, Bond suggests cancelling the direct debit with the bank immediately – no argy-bargy with the gym required. However, if you are still under contract and looking to get out, cancelling your direct debit could be seen as a breach of contract, so it’s best to deal with the gym directly – but the sooner the better. As the experts we spoke to point out, it’s not in the gyms’ interests to solve your problems quickly while they are still receiving your payments every month.

Getting out of contract

By far the most common complaint about gyms is the tortuous exit rules they impose. Many gyms capitalise on the sense of shame that so often hangs over a “quitter”. While it should be possible to cancel membership over the phone or in writing, many people told us their gym insists they make an appointment to come in to cancel.

According to Harrison, these appointments give the gym a window of opportunity to retain their customer, as well as the strategic advantage of drawing out direct-debit payments as long as possible. “It’s an emotional marketing tactic,” he says. “If you have to say you don’t want to be a member anymore it’s much more difficult face to face, as we have to admit in person that we aren’t consistent.” Fitness First is notorious for this tactic, according to the vast body of anecdotal evidence CHOICE gathered, but is certainly not alone.

Fernwood’s Jo Stagg says her company encourages customers to come into the gym to cancel because they want to check their customers’ health and wellbeing, but it isn’t a requirement. She does concede, however, that a face-to-face meeting is an opportunity to “remotivate” customers who might be considering breaking their contract to avoid the cost of cancellation and to help them achieve their original goals.

National Operations Manager Michele Harding told CHOICE Fitness First amended its policy at the beginning of 2008, allowing members to cancel their membership over the phone as long as they confirm the request in writing. Despite her assurances, however, we have received plenty of anecdotal evidence that Fitness First members are being made to jump through the same old hoops.

Harding conceded from time to time requests are mismanaged and any members who are told they must come in person to cancel their contract can assert their right to cancel by phone and written confirmation. If the customer experiences any opposition they should contact their club general manager to resolve the issue. Failing that, she says, they should contact Harding herself or Rebecca Davies at head office, who “will assist with the resolution immediately”.

While it is heartening that Fitness First has taken steps to address criticisms and amend its policy, it’s disappointing the new rules are obviously not rigorously enforced and the onus remains on consumers to know their rights.

Are the contracts fair?

Making it difficult for consumers to end a gym membership after the initial contract period is unfair. New federal unfair contracts legislation, due to be in place for 2010, may help where the problem is a harsh cancellation clause, otherwise it’s unlikely that these laws will stop unfair practices designed to prey on consumers’ ignorance of their rights and other problems endemic to the industry – namely, pressured sales tactics and arbitrary pricing.

The NSW Department of Fair Trading has received 344 complaints in the last 12 months from unhappy gym goers, 149 of which related to cancellations and cooling-off periods. It is this controversial area of gym contracts – the onerous terms around cancelling that often favour the gym – that new legislation may go some way to addressing.

At present, only Victoria has unfair contract laws. Carolyn Bond says it may take time for the new laws to effect change. “Gyms have been a problem for years,” she says. “Unfair contract terms should prevent some of the problems we see, but some problems are due to a bad culture within some of the industry. Some businesses appear prepared to do whatever it takes to keep consumers trapped in their contracts.”

For more information on how to spot unfair contract terms, visit the Consumer Affairs Victoria website, and follow the links.


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