The Consumer Council openly sanctioned a fitness centre chain earlier this year for their unscrupulous practices deployed in selling memberships and services. Thereafter, due to business difficulty the chain closed down all its branches, affecting more than 100,000 members. In view of the hefty spending amount involved, the public once again concerned with the sales tactics deployed by fitness centres and the risks of pre-payment consumption. However, after half a year, the Council’s latest investigation revealed that sales practices of some fitness centres still merited our careful attention, together with situations like long-term contracts of some service plans, insufficient explanation of contract terms of conditions during selling process, and some fitness centres may even disallow freezing of memberships or early termination of contracts. The situation is worrisome as consumers are not well protected.
Council staff conducted mystery visit to more than 10 fitness centres in August, to collect information on different memberships/plans, fees required as well as terms and conditions of contracts. Some fitness centres were evasive and glossed over details, while some refused to provide the service or contracts terms for review. Out of the 11 selected fitness centres the Council has sent letters to, only 1 centre responded to the inquiries, which reflected that there is a serious lack of information transparency of the industry.
The investigation revealed that membership plans of the fitness centres are usually quite long, with the longest one up to 60 months. The fees could amount to tens of thousands of dollars, and some required a full upfront payment. Taking the 24-month plan where fitness centre facilities can be freely used as an example, the total sum inclusive of joining fee, administration fee and other miscellaneous charges can range from $7,380 to $43,012. Some fitness centres stated that the contract once signed, no refund would be made even though the consumers might not have started using their services.
Regarding early termination, some fitness centres indicated that termination of contract would not be entertained under any circumstances within the contract period, and no refund of the unused monthly fees or service charges would be made. Although one claimed that early termination of membership is allowed, consumers should have completed no less than half of the contract period, and a certain amount of administration fee must be charged.
A number of fitness centres allowed consumers, under specific situations such as pregnancy or injury, to apply for temporary suspension of the memberships, but applications are restricted to those supported by medical certificates. Some of the fitness centres will continue to charge a fee of $150 to $300 per month or 20% of the average monthly fees during the suspension period.
During the investigation, a number of the fitness centres claimed to have a 5-day or 7-day cooling-off or money back guarantee period. However, some of them stipulated that this arrangement was only valid before customers had commenced using the services, or only applicable to first-time registered members, or joining fee and administration fee had to be deducted from the full amount paid if customer cancelled the contracts during the cooling-off period.
As for sales practices, the investigation discovered that to perform body assessment on customers and use the data to provide “professional opinion” to consumers to promote different plans remain as a common tactic of salespersons. During the process, “time-limited” offers and discounts are often emphasised to lure consumers into making hasty decisions. Marathon persuasion tactic was applied where different staff such as centre staff, fitness trainers and managers took turns to push signing of contracts. Some staff even used harsh tones to command consumers to stay and make them feel under pressure. Such practice is highly improper.
The Council reminds fitness centres that such sales tactics could constitute aggressive commercial practices under the Trade Descriptions Ordinance. The industry should review the conduct of salespersons, and stringently monitor the sales practices of frontline staff so that consumers are treated fairly and reasonably. The Council will continue to monitor the trade practices of fitness centres and liaise closely with the enforcement authority.
The Council is of the view that the fitness training industry should review and address industry issues seriously. To better protect the rights of consumers, the Council urges the industry to take initiative to introduce a contract cooling-off period that is fair, reasonable and transparent. Furthermore, when consumers plan to join a fitness centre, they are alerted to the following:
- Fitness centre membership often lasts very long but there are also fitness centres offering 1-month contract-free plan to customers;
- Before committing pre-payment, consumers should assess their risk bearing capability, and evaluate their personal financial situation, affordability as well as chances of using such services. Most importantly, avoid making a substantial one-off pre-payment or a longer-than-needed contract;
- Do not rely solely on verbal promise made by the fitness centre salesperson, ask for a copy of the contract and scrutinise carefully the terms and conditions to ensure they are fully understood before signing up and making a payment;
- If the fitness centre provides a cooling-off period, consumers should proactively seek understanding on restrictions. Do not start using its services right away under staff and fitness coaches’ persuasion otherwise the cooling-off period could become invalid;
- Some fitness centres require consumers to tender their membership termination application and start the related procedures 1 to 2 months before contracts end, otherwise the membership will go on;
- Consumers should choose for payment method carefully. If a company closes down, different payment methods chosen will affect the chance of applying for refund from respective card issuers.
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