Press Release

NEWARK – The New Jersey Division of Consumer Affairs today announced administrative actions against 16 health clubs, and has assessed a total of $102,750 in civil penalties against the clubs, for their alleged failure to comply with consumer protection laws.

"Consumers who pay for health club memberships deserve the assurance that they're signing contracts with clubs that are properly registered and operating in accordance with the law," said Acting Attorney General Robert Lougy. "The clubs we cited have allegedly failed to comply with the laws designed to protect consumers. We're sending a message to them that we won't tolerate such non-compliance."

The Division of Consumer Affairs, working with the Division of Law, issued Notices of Violation to 15 of the 16 clubs for failing to register their businesses. State law requires that all health clubs which devote at least 40 percent of their floor space to physical fitness services must register with the Division of Consumer Affairs and provide information about their ownership and operations.

In addition to the registration violations, five of the 16 clubs allegedly violated consumer laws by selling longer‐term contracts to consumers without maintaining a required bond, letter of credit or other form of security acceptable to the Division of Consumer Affairs, as required by state law. This requirement assures a source for refunds to consumers, should the health club cease business or violate their contracts.

Along with these violations, 11 of the 16 clubs were cited for allegedly failing to conspicuously post a notification of consumers' rights, as required by law.

"When it comes to joining a health club, consumers shouldn't have to worry that getting healthy will hurt them financially," said Steve Lee, Acting Director of the New Jersey Division of Consumer Affairs. "They have a right to expect their club is properly registered and properly bonded so they won't lose money on a long-term contract should the club go out of business or violate contracts with the consumer."

The Notices of Violation arose out of the Division's site visits at 23 health clubs statewide to observe their facilities and business operations, obtain copies of contracts and other documents, and compare that information with the state's registration records.

A $5,000 penalty is being assessed for registration violations. The clubs that allegedly offered contracts longer than three months without posting a required bond, line of credit or other form of acceptable security, have each been assessed an additional $5,000 penalty. The clubs that failed to conspicuously post the consumer rights notice have each been assessed an additional $250 penalty.

In response to the Notices of Violation, each business may acknowledge the conduct, agree to comply with the law, and pay the assessed civil penalty; or request a mitigation conference at which the Division would consider mitigating circumstances before rendering a final decision; or contest the charges and request a formal administrative hearing.

Advice for Consumers:

Before signing a health club contract or paying a deposit, consumers are urged to:

• Ask for the health club's State registration number. Then visit the Division of Consumer Affairs' website at www.NJConsumerAffairs.gov to verify that the club is actively registered.

• If you decide to sign up for a membership for a period longer than three months, call the Division of Consumer Affairs at 1‐800‐242‐5846 (toll free within New Jersey ) or 973‐ 504‐6200 to learn whether the health club has posted the security bond required by law. This security bond assures that a health club would be able to provide refunds to consumers, should the company cease business or violate their contracts.

• Be sure to demand a written contract that clearly indicates the full amount you must pay. State law requires that all health club contracts must be in writing. The contract must conspicuously set forth, on the contract's first page, the buyer's total payment obligation.

• Make sure to read the contract thoroughly and carefully, before you sign. Be sure you are fully aware of the services you will receive, and that you understand all contract terms. After signing a contract, you are entitled under State law to obtain a copy for your own records.

• Know your rights about cancellation. Under State law, the buyer may cancel a health club contract at any time within three operating days after receiving the contract. The buyer's cancellation must be made in writing, by mail or personal delivery. After cancellation, the buyer is entitled to a full refund within 30 days.

Additional advice can be found in the Division's Consumer Brief on Health Clubs (also available in Spanish).

Investigators Murat Botas, Oscar Mejia, Roger Hines, Jessica Lugo and Mitchell Bomrind conducted this investigation.

Deputy Attorneys General from the Consumer Fraud Prosecution Section within the Division of Law represented the State in these actions.

Consumers who believe they have been cheated or scammed by a business, or suspect any other form of consumer abuse, can file an online complaint with the State Division of Consumer Affairs by visiting its website or by calling 1-800-242-5846 (toll free within New Jersey) or 973-504- 6200.

Follow the Division of Consumer Affairs on Facebook , and check our online calendar of upcoming Consumer Outreach events.

###