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Gym memberships and the coronavirus shutdown

The law says you can't be charged for a service that's not being delivered, but these are extraordinary times. 

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Last updated: 25 March 2020

Need to know

  • With gyms closed down on government orders, members are wondering what happens to their membership fees
  • Under Australian Consumer Law, gyms can't keep charging you if they're no longer open – but it gets complicated when they're closed by the government
  • Most major gym franchises are suspending fees and extending expiry dates, but smaller gyms may not have the means to do so

Can you still be charged for a service you're no longer receiving? 

The Australian Consumer Law (ACL) is pretty clear: businesses can't keep taking your money for something they've stopped delivering. 

And the ACL, of course, applies to every business operating in Australia and trumps any individual policy a business might have. 

So what happens to your gym payments in the midst of the coronavirus pandemic, when the gym closes its doors on orders of the government? 

There are some caveats for when a service is stopped by the government and not by the business itself

CHOICE consumer advocate Jonathan Brown explains: 

"A business isn't allowed to keep charging you for a service that they're unable to provide. Your gym should offer you a suspension of fees or cancellation as they close. If you've paid fees in advance, talk to your gym about your options," Brown says. 

But these are extraordinary times, and the ACL does have some caveats for when a service is stopped by the government and not by the business itself. 

If you've prepaid your membership, for example, different rules may apply. 

Your gym should offer you a suspension of fees or cancellation as they close. If you've paid fees in advance, talk to your gym about your options

CHOICE consumer advocate Jonathan Brown

"Look closely at your contract and see what options are available – many gyms are providing proactive refunds or credit notes for future use," Brown says. 

It's also important to know that many gym franchises are individually owned businesses, though their branding and other policies are controlled by the head offices. 

Small business owners generally pay in the range of $200,000 to $300,000 to buy a gym franchise, money that is most often borrowed from a bank. 

The owners' loan repayments will continue during the closure, unless the bank in question offers some form of relief (as some are). 

One gym owner proposed a deal in which members would keep paying half their membership fees during the shutdown and have their fees cut by half for the same length of time when the gym re-opens

Gym owners may also be eligible for government payments aimed at keeping small businesses afloat during the pandemic. 

As one small gym owner said in an email to his members, "I like many others will continue to have a lease and ongoing expenses during the shutdown". 

The owner proposed a deal in which members would keep paying half their membership fees during the shutdown and have their fees cut by half for the same length of time when the gym re-opens. 

The option will "assist me to cover expenses and help ensure we will have a gym to return to on the other side," the owner wrote. 

Then again, many households are under extreme financial duress as well, so it's a question of affordability for many. 

empty_gym

Gym owners may also be eligible for government payments aimed at keeping small businesses afloat during the pandemic.

What are the big gym franchises doing? 

We contacted the top seven gym franchises in Australia by market share – Anytime Fitness, Fitness First, Snap Fitness, Plus Fitness, Fernwood Fitness, Jetts and Goodlife health clubs – to ask about their policy on memberships and payments during the coronavirus shutdown. 

We didn't hear back from most of them, but many of the big franchises have messages on their head office websites about closures and ongoing payments, messages that members wouldn't see unless they went looking.  

  • Anytime Fitness: Members have the option of continuing to pay $2.50 a week in exchange for access to online training or freezing their membership. 
  • Fitness First: Memberships will be put on "time freeze" until the business re-opens. Expiry dates for pre-paid memberships will be extended. 
  • Snap Fitness: Members won't be billed when the business is closed. Pre-paid members will have expiry dates extended for the duration of the closure. 
  • Plus Fitness: Member payments will be suspended during the closure, with the option to continue paying $6.50 per week in exchange for online training. 
  • Jetts: Members paying by direct debit will continue to be charged $3.50 per week "to provide our franchise owners with enough funds to keep their heads above water". Online training will be available. 
  • Fernwood Fitness: Memberships will be put on hold until the gyms reopen, with the option to continue paying $4 a week to help keep franchises afloat. These fees will be credited to accounts."
  • Goodlife health clubs: Memberships will be frozen for the duration of the closure. Members will be contacted by email with more information.

We're in this together

Throughout the coronavirus crisis, CHOICE will be here to help. We'll be working with you to stand up for consumer rights, calling out bad business practice via our investigative journalism, and providing regular expert advice and resources.

As a nonprofit organisation, we depend on your support. If you can, please consider making a donation so we can do even more in future.

How to stop a direct debit

Most gym payments are direct debited from customers' accounts these days, which actually puts the power in your hands – whether your bank knows it or not. 

According to the Banking Code of Practice: 

  • you can ask your bank to cancel your direct debit request and they will promptly process this
  • you can ask your bank to investigate an unauthorised direct debit and they will act promptly to assist you
  • you won't be told to raise the cancellation or complaint with the merchant you pay through the direct debit first, however, your bank may suggest that you also contact that merchant.

It all looks good on paper, but banks don't have a great track record of sticking by the code. 

Only four of the 16 banks we mystery-shopped in an earlier investigation adhered to the code's stance on direct debits. 

If you're looking to support your local business by continuing to pay a small fee in exchange for online training or a refund down the road, that's your call. And it may be the right one in these troubled times. 

Only four of the 16 banks we shadow shopped in an earlier investigation adhered to the code's stance on direct debits

As Plus Fitness points out on its website, "your Plus Fitness is owned and operated by a member of your local community. With small business being the lifeblood of our nation, we strongly encourage you to do everything you can to support all local businesses at this extremely challenging time."

But we don't think gyms should continue to keep charging you as the default option, as appears to be happening with Jetts. 

So if you want to get a gym membership direct debit cancelled and encounter some difficulties with your bank, quoting the banking code of practice should help motivate them to follow their own rules. 

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