Wednesday, August 2, 2017

Can You Be Charged for Canceling a Gym Membership?

For some Michigan residents, a gym membership can be the gift that keeps on giving. But if you have to move, cut costs, or simply change gyms it can sometimes be difficult to cancel that obligation. Gyms can pressure members to renew or modify their agreements, and even threaten cancellation fees or penalties. But the Michigan Attorney General says sometimes these tactics can cross the line of consumer protection laws.

Western Michigan Gym Charges Members to Leave

For example, Nichole Betterly of Grand Rapids, signed up for a 30-day trial at the gym franchise Family Fitness in 2014. She attended a couple of times and cancelled. Even though the gym verified the cancellation, it turns out they had charged her $1,500 over the last three years, without ever sending her a bill or contacting her. Betterly only discovered the charge had been sent to collections when her bank pulled a credit report in anticipation of a personal loan.

Betterly wasn’t the only one facing excessive cancellation fees. The Michigan Consumer Protection Agency had received over 100 consumer complaints against the company (and its affiliates) since 2011. Nearly half of those complaints were filed in 2017. 

Michigan Attorney General Warns of Consumer Protection Violations

In response to these complaints, on July 14, 2017, the Michigan Attorney General’s Office issued a cease and desist letter to Family Fitness (and its affiliates) warning that their company policies may be violating state consumer protection laws. Following an initial investigation, it appeared Family Fitness had taken the position that anyone canceling a membership agreement was still required to pay the full contract amount. With agreements ranging from one to three years, consumers like Betterly were facing hundreds, or even thousands of dollars in cancellation fees.

Cancellation Fees and Consumer Protection Laws

Gym membership cancellation fees aren’t automatically illegal. But when these fees impose a penalty, rather than compensating the gym for the reasonably expected cost (damages) connected to the cancellation, they are deemed “excessive” and “unconscionable.” That’s when the Michigan consumer protect laws come into play. The Attorney General’s office says that Family Fitness’s cancellation fees may have been unlawful because it used unfair, unconscionable, and deceptive methods. Its contracts and customer communications likely caused customers to misunderstand their rights and obligations under the contract. Specifically, consumers thought they could cancel the contract when in fact, they were still charged the full amount.

The Attorney General’s office letter is a “Notice of Intended Action.” If Family Fitness refuses to change its business practices, it could be facing a lawsuit to protect future members and reimburse consumers for the damage done by the unfair cancellation fees.

Dani K. Liblang is a consumer protection attorney at The Liblang Law Firm, PC, in Birmingham, Michigan. If you have discovered unfair gym cancellation charges, contact The Liblang Law Firm, PC, for a free consultation.

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