About a month ago, In Shape Health Clubs made headlines across the west coast, but not for the right reasons. The chain fitness center, located in multiple California counties, settled an ongoing lawsuit to pay a total $26 million for unfair business practice claims.
A whopping $23 million of the total amount is to be distributed amongst current and former club members while the remaining $3 million is the penalty resulting from the investigation findings. What did In Shape Health Clubs do to members to cause this amount of damage? How can you learn from these mistakes?
Since 2014, district attorneys in Monterey, Kern, and Santa Cruz counties investigated the health club due to numerous complaints regarding membership promotions, unauthorized billings, cancellation practices and collection actions. Allegedly, In Shape health Clubs violated consumer protection laws by “selling memberships through promotional offerings touting ‘free’ services without fully disclosing membership terms; refusing to accept cancellation requests; issuing unauthorized billings; and pursuing collections on invalid debts” according to the Monterey Herald.
The fitness center is taking steps that will hopefully reverse any negative credit rating or brand image. In Shape Health Club’s past and present members are now being compensated properly. However, the best way to avoid fines and initiate damage control is to learn from the mistakes of others and avoid damages at all. When your fitness center is honest with members and avoid dishonest business practices, you will build a good reputation people will want to be a part of.
Do not advertise anything as free unless you mean it. Disclosing information means fitness centers cannot sign a member into a contract without explicitly stating that the offered free trial becomes a membership at the end of the promotional period unless the consumer takes actions otherwise.
In order to be charged for a service, the consumer must first know and authorize that charge. It’s as simple as that. Failing to do either is theft.
A club cannot hold a member to a contract that they no longer wish to uphold. If your membership agreement allows the client to cancel their contract at any point rather than after a specific amount of time, like 1 year, you are obligated to release them from that contract.
A debt can only be collected if it:
If you follow these business practices, your company will not only avoid lawsuits but your honest reputation will draw more loyal gym members to your fitness center.