Business

AG: Peak Fitness may only accept monthly payments

Posted May 29, 2009 11:20 a.m. EDT
Updated May 29, 2009 4:48 p.m. EDT

— Peak Fitness will stop selling prepaid memberships and collecting other advance payments, effective Friday, the state attorney general’s office announced.

The agreement came as a result of a lawsuit filed by the state against the health club chain. In the past five years, the state has received more than 500 complaints regarding Peak-related health clubs, Attorney General Roy Cooper said.

The consent agreement is the second against Peak Fitness this year. In January, the chain agreed to designate a single point of contact to handle consumer complaints, clearly post contact information for Peak’s billing company, give advance notice to gym members and the Attorney General’s office when a health club closes or transfers memberships, and purchase and maintain appropriate bonds for each health club.

Since that time, Peak Fitness has closed gyms in Charlotte, Garner, Knightdale, Raleigh and Winston-Salem. Also, Peak Holdings, a subsidiary of Peak Fitness, filed for Chapter 11 bankruptcy in April.

In May, the company’s bond holder canceled the bonds required by law for each club to reimburse member payments if the club closes. As a result, the state filed suit, prompting Thursday’s action.

Peak Fitness can continue to operate but can only collect money from customers who pay month to month for their membership. Until the company can get bonds, it is barred from selling prepaid memberships.

"We wanted to make sure that consumers were covered," Cooper said. "Consumers should not be left out in the cold when a health club closes its doors. We want to make sure they get their money back. If there's no bond, they can't get their money back."

Health club members can report problems to the state Consumer Protection Division at www.ncdoj.gov or toll-free at 1-877-5-NOSCAM.