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24 Hour Fitness To Pay $1.2 Million Penalty For Falsely Promising Guaranteed Membership Rates

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From the Contra Costa County Office of the District Attorney:

MARTINEZ, California — Contra Costa District Attorney Diana Becton, in conjunction with Orange County District Attorney Tony Rackauckas, announced that on November 1, 2017, the District Attorney’s Consumer Protection Divisions reached a consumer protection settlement of $1.2 million in civil penalties against 24 Hour Fitness, Inc. The company must also pay $100,000 in costs to the County of Orange and Contra Costa, as well as pay restitution to the members who were misled by the promises of a low lifetime annual renewal rate in exchange for large up-front membership fees.

24 Hour Fitness is headquartered in San Ramon, Contra Costa County, California and has 400+ membership fitness gyms in 18 states, of which 140 are located in California. The allegations against 24 Hour Fitness state that between 2006 and 2009, 24 Hour sold pre-paid memberships in a false and misleading manner when 24 Hour sales representatives took large up-front fees for an initial 2 or 3-year membership period, with the promise that members would be guaranteed a low life-time annual renewal rate for life, as long as the member remained in good standing by paying their annual renewal fee on time. The up-front fees ranged from $600 to over $1400 with a promise of a fixed annual renewal rate between $29-$199 a year.

In 2006, 24 Hour made changes to the language of their pre-paid membership contracts that allowed for annual rate increases, but the District Attorneys alleged that 24 Hour sales representatives continued to sell these post-April 2006 memberships with verbal promises that their annual renewal rates would be guaranteed fixed for life. Consumers also believed they were misled by the verbal representations and in 2015, when 24 Hour began increasing annual renewal rates, they complained to the Company and the Better Business Bureau. They also started an on-line petition protesting the company’s broken promises.

The complaint alleges that 24 Hour refused to honor the verbal guarantees, so members who refused to pay the increased annual rate had their memberships terminated after having paid the large up-front fees or forced members to pay the increased rates.

The Settlement requires that 24 Hour Fitness allow pre-paid members to renew their memberships at the promised low annual lifetime renewal rate, if the member submits a claim form and declaration that they were told by a 24 Hour sales representative that their annual rate was guaranteed to remain the same for life.  All past and present 24 Hour Fitness members, who purchased post 2006 pre-paid membership contracts, or were updated to these contracts, and either paid the increase or were terminated for failure to pay the increase, will be sent a notice with instructions on how, where and when to submit their forms and declarations.

The District Attorney’s Offices want to make it clear that, if you receive a notice, it means you have one of the new contracts that allows for the increase, even if your rate has not yet been increased. It is important, that if you were promised a lifetime guaranteed annual renewal rate you must fill out the claim form and declaration to preserve or reinstate your guaranteed annual renewal rate. The restitution provisions of this settlement extend to qualifying pre-paid members nationwide.

24 Hour Fitness admitted no wrong-doing in the Settlement Agreement.

Deputy District Attorney Michelle Cipolletti from the Orange County District Attorney’s Consumer Protection Unit and Deputy District Attorney Dodie Katague from the Contra Costa Consumer Protection Unit prosecuted this case.

For further information, please contact DDA Dodie Katague at 925-957-8604.

10 COMMENTS

  1. People need to wise up and keep in mind these are SALES PEOPLE who work on commission. Be careful what you sign, and ask a lot of questions.

    My husband and I get our money’s worth at the gym (we’re truly committed) but we’re hardly the norm. Unless you’re really into working out, you’re better off exercising at home. Walk, jog, take the stairs, etc.

    Nobody should be lied to – but once again, these are sales people, and they’re not salaried employees. Businesses are in business to make money, and they want you to part with it. Buyer beware.

    It’s unfortunate that lawsuits have to be filed – but it happens. Become more business savvy, and don’t let yourself be taken advantage of. People only do to you what you let them do to you…

  2. Now there’s even less money to spend on maintenance and cleaning. Our Moraga 24 Hour Fitness is so greasy! I love the employees there, but the men’s locker room is a bit of a nightmare. The customers could sure help if they wouldn’t drop their wet towels (and other gross things) all over the place. 24 Hour Fitness corporation has a well-earned reputation as a money-grubbing operation, abusing employees and customers alike.

  3. When did we make the jump from I’ll perform a service for you and you’ll pay me for that to Pay us up front and we’ll give you something later — if we remember and want to. And then there’s that fine print preventing litigation. Something went wrong.

  4. Haven’t liked community gyms and locker rooms since high school. Probably says something about my own body awareness than anything else. Don’t want to frighten anyone.

  5. Planet Fitness is way better. Their business model is to sell memberships to folks who won’t come to the gym. Plus bagels and pizza! So, if you really do workout, Planet Fitness is awesome because most equipment is available even when it’s busy. Planet Fitness for life!

  6. Thank you for this. I am one of those people who paid the 3 year up-front price and was promised a set price for life, only to see a big increase a few years later. I will be sure and fill out the claim form.

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