Peak Fitness ordered to shape up
Posted January 8, 2009 2:11 p.m. EST
Updated January 8, 2009 4:46 p.m. EST
Raleigh, N.C. — A Superior Court judge on Thursday ordered health-club chain Peak Fitness to change its operating practices in response to consumer complaints.
The state Attorney General's Office negotiated a comprehensive agreement with Peak Fitness, and Judge Howard Manning approved the consent judgment Thursday.
“Many people are making New Year’s resolutions to lose weight or get in shape by joining a gym,” Attorney General Roy Cooper said in a statement. “We want to make sure that people get what they pay for and that health clubs treat their members fairly.”
Cooper said his office has received about 300 complaints regarding Peak Fitness over the past five years.
Under the agreement, Peak Fitness and its owners will change customer service, contracts and billing practices at all 28 of its health clubs across North Carolina. The company also will reimburse the Attorney General’s Office $30,000 for consumer education and investigative costs.
The changes include the following:
- A single point of contact will handle all consumer complaints, concerns and questions, and contact information will be clearly posted in all Peak Fitness clubs, on all Peak Fitness Web sites and on all customers’ contracts.
- Contact information for Peak’s billing company, ABC Financial, will be clearly posted in all Peak Fitness clubs, on all Peak Fitness Web sites and on all customers’ contracts, and a working fax machine will be provided in all Peak Fitness clubs for cancellations and correspondence with Peak Fitness.
- Appropriate bonds will be purchased and maintained for each health club the company operates in North Carolina. Bonds can be used to pay refunds to members if the club shuts down.
- Memberships to any club cannot be sold more than 180 days before it will open.
- The Attorney General’s Office will be notified before the company enters membership contracts for clubs that have yet to open, and the company will purchase a bond of at least $10,000 for the club and give consumers written notice of their extended three-day right to cancel their contracts.
- The company will give advance notice to gym members and the Attorney General’s Office when a health club will be closed or when members will be transferred to another location.
- Pro-rated refunds will be given to any customer who purchases or renews a membership to a club that then closes within 90 days.
- All membership contracts will include a specific time period for the membership measured in years or parts of a year, contain a full statement of consumers’ right to cancel the contract within three days of signing it and contain a full statement of their right to refunds.
- The company will clearly explain that automatic renewal of memberships is optional.
- Pro-rated refunds will be paid when members move more than eight miles from the club or more than 30 miles from any Peak Fitness location or are no longer able to use the facilities because of death or disability.
- The company must honor lifetime contracts purchased prior to 1980 at health clubs now owned by Peak Fitness. Consumers who allowed their lifetime contract to lapse or otherwise entered a replacement contract with Peak in 2008 have 60 days to contact Peak to get their lifetime contract reinstated.
The consent judgment also bars Peak Fitness from making any false or misleading statement to consumers, such as telling members that they can cancel their contracts at any time, that a club will not close or that a new club will open.
“Over the past few years, we’ve been able to recover more than $1 million for hundreds of North Carolinians who were members of health clubs, gyms or dating clubs that shut their doors,” Cooper said. “If your health club closes down unexpectedly, let us know about it.”
Some Knightdale customers of Peak Fitness might also be eligible for refunds, he said. People who purchased memberships at Peak Fitness Knightdale before the club opened and didn’t get a refund as requested can apply to get their money back by contacting the company by e-mail through the PeakFitnessClubs.com Web site or by fax at 704-896-5741.
In a separate case, Cooper said his office recently won refunds for members of a Rocky Mount health club that closed its doors in September.
Fitness Express for Women Only has paid $10,000, which will be used to repay all gym members for the time left on their contracts after the club closed. The Attorney General's Office won an additional $1,400 in consumer refunds from ASF, a third-party billing company that withdrew monthly fees from members’ accounts after Fitness Express shut down.