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Consumer Protection Tips for the Closure of Fitness Centres

Consumer Protection Tips for the Closure of Fitness Centres

In recent years, public health awareness has been on the rise. Many people pursue better health and physique through exercising. Whilst the Consumer Council has continuously reminded consumers to avoid high-value prepayment transactions to minimise loss, the business model of fitness centres generally involves prepaid consumption. In case of the closure of fitness centres, how can consumers safeguard their own rights?

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  1. Should I accept the offer to transfer my membership to another fitness centre as the current centre has been closed?
    Consumers should understand and consider the following from the fitness centre before deciding :
    • Are there any additional charges involved in the transition scheme
    • How to calculate prepaid and unused services
    • Request that the documents to be signed and the terms and conditions for the transferral be provided in advance
    • The consequences of not accepting the transition arrangement, for example, how to compensate according to the contract terms, or refund the advance payment and deposit
    • Whether to agree to submit personal data to another fitness centre
  2. With the closure of fitness centres, what should consumers pay attention to in safeguarding their own rights?
    • Check with the fitness centre for matters and arrangements such as remaining pre-payments, unused services, and how to retrieve personal items in lockers.
    • For refunds, please note the following:
      • Consumers should contact the credit card issuer as soon as possible if they have made a lump-sum payment by credit card, together with the signed statement and a copy of the purchase receipt/contract and try to ask the issuer to claim the unused prepaid portion from the commercial bank of the fitness centre on their behalf
      • Consumers paying by credit card instalments are in fact signing a loan contract with a credit card company. Under normal circumstances, consumers are still responsible for regular repayments
    • Keep all documents properly, such as contracts or receipts, for they may help to provide support in the event of a dispute in the future
  3. If the fitness centre is liquidated, will consumers receive compensation?
    • When a business is closed and liquidated, its assets generally need to be used to repay the debts of higher priority creditors. Consumers can only act as unsecured creditors after other creditors, for instance, employees of the liquidating company, government, secured creditors, etc. If there is still a balance, consumers will receive compensation; so there is a chance that consumers may not be able to retrieve or enjoy the purchased products or services, receive payment, or refund the prepaid amount and deposit
  4. Does the business suspension of fitness centres mean that it is closed? Can the Consumer Council follow up?
    • If the fitness centre is fully suspended, and the Council fails to contact the person in charge of the company, the usual conciliation process that the Council adopts may no longer apply
    • When a company is liquidated, no matter through self-application or others’ application, a formal notice will normally be provided to entrust a provisional liquidator to take over the company concerned. Therefore, consumers can also pay attention to the official announcement of the company and contact the provisional liquidator as instructed for next-step arrangements, such as registering as a creditor
  5. Although fitness centres are fully aware that they will soon close and fail to provide services to consumers, it continues to entice customers with marketing and promotion. Will this involve a violation of the Trade Descriptions Ordinance?
    • According to the Trade Descriptions Ordinance, any trader, when accepting payment, intends not to supply the relevant product; or intends to supply a product that is materially different from the product in respect of which the payment or other consideration is accepted; or there are no reasonable grounds to believe that the product can be supplied by the trader within a specified or reasonable period, it is considered breaching the law.
    • If consumers suspect violations of the Trade Descriptions Ordinance, they can report the case to the Customs and Excise Department (C&ED). The Council can also refer the cases to C&ED for follow-up
  6. Why does the Council propose introducing a statutory cooling-off period in the fitness and beauty industry?
    • Some beauty parlours and fitness centres have been criticised for their business malpractices over the years. Some malefactors in the industry have used high-pressure sales tactics, coercion and sweet talk, to force consumers to prepay for large purchases. In the past few years, the Council has reprimanded a number of traders through naming sanctions. For example, in 2019, the Council named 4 fitness centres and strongly reprimanded their undesirable sales practices targeting inexperienced young consumers.
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    • In 2018, the Council published a study report on the mandatory cooling-off period, proposing the introduction of a mandatory cooling-off period targeting specific transaction models (including unsolicited or distance contracts) or trade sectors, such as fitness services, beauty services, timeshare, etc., which allows consumers to unconditionally cancel prepaid contracts involving these industries without reason within a specified period to enhance consumer protection.
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    • In 2019, the government consulted the public on introducing a mandatory cooling-off period. The Council supported the proposal in the consultation document to introduce a cooling-off period of 7 calendar days and a refund period of 14 calendar days in specified industries to allow consumers sufficient time to process refund arrangements
    • The government stated in the Policy Address that it planned to issue a public consultation report on the proposal to establish a statutory cooling-off period for beauty and fitness service consumption contracts in early 2020 and to submit a related bill to the Legislative Council
    • The legislative work on the statutory cooling-off period was suspended due to social events and COVID-19. The Council hopes to complete the legislation as soon as possible to provide greater protection for consumer 

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