Press Release

NEWARK – Just in time to protect consumers seeking to get back in shape after a severe winter, the New Jersey Division of Consumer Affairs today announced administrative actions against 53 health clubs, and has assessed a total of $283,500 in civil penalties, due to the clubs’ alleged failure to comply with consumer protection laws.

“When consumers pay for a gym membership, they need to know the gym will be held accountable for maintaining its side of the contract. That is the purpose of our registration laws and other requirements,” Acting Attorney General Hoffman said. “We are citing these health clubs for their alleged failure to comply with these consumer protection laws.”

The Division of Consumer Affairs, working with the Division of Law, issued Notices of Violation and assessed a total of $165,000 in civil penalties against 31 unregistered health clubs. 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.

Additionally, the Division of Consumer Affairs issued Notices of Violation and assessed $118,500 in penalties against 22 health clubs that are registered but allegedly violated State law by selling longer‐term contracts to consumers, without maintaining a required security bond or letter of credit. Under State law, any health club that offers contracts for longer than three months must post a security bond or letter of credit with the Division of Consumer Affairs. This requirement assures a source for refunds to consumers, should the health club cease business or violate their contracts.

New Jersey Division of Consumer Affairs Acting Director Steve Lee said, “With better weather finally approaching, many New Jerseyans may feel inspired to 'hit the gym' and get in shape. These consumers deserve the assurance that their health club is operating in compliance with the law – and that they won't lose money on a long term contract if the health club goes out of business."

The Notices of Violation allege that the health clubs violated New Jersey’s Consumer Fraud Act and/or the State’s statutes and regulations governing health clubs. Division investigators conducted the investigation by conducting site visits at 72 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.

The list of 31 unregistered health clubs, including the civil penalty assessed against each, can be found here. Each business was assessed a $5,000 penalty. Two companies – Physiques Unlimited, in Whippany, and Physiques Unlimited II, in Belleville – were assessed total penalties of $10,000 each. The two companies allegedly failed to comply with 2011 Consent Orders in which their owners resolved earlier investigations by the Division of Consumer Affairs and, among other things, agreed not to sell health club services without registering as required by law.

The list of 22 registered health clubs that allegedly offered contracts longer than three months without posting a required security bond or line of credit can be found here. Each business was assessed a $5,000 penalty. In some cases, the Division assessed additional penalties of $250 for failure to conspicuously post a required notification of consumers’ rights, and/or additional penalties of $250 for failure to conspicuously post the company’s state registration record.

The Division of Consumer Affairs has filed administrative Notices of Violation against each of the 53 businesses. In response, 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 before the Director of the Division of Consumer Affairs. If an administrative hearing is held and the Division finds the violations have been proven, additional civil penalties of up to $10,000 for a first violation and up to $20,000 for subsequent violations may be assessed.

Advice for Consumers:

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

• Ask a friend or relative to recommend a good health club, then visit the club during the time of day when you would expect to use its facilities. Check to see whether you are satisfied with the equipment’s working order and cleanliness. If possible, talk with health club members to learn their impressions of the facilities.

• 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 as 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 it 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).

Supervising Investigator Murat Botas and investigators Oscar Mejia, Mitchell Bomrind, Roger Hines, Joseph Iasso, Ediz Laypan, and Donna Leslie conducted this investigation.

Also playing an important role in the investigation were the following county consumer affairs investigators: From the Cape May County Office of Consumer Affairs, Dolores Rambo; from the Gloucester County Office of Consumer Affairs, Karen Crumsho and Bob Pandola; from the Hudson County Office of Consumer Affairs, Lynda Kennedy; from the Hudson County Office of Consumer Affairs, Steve Krywinski; from the Mercer County Office of Consumer Affairs, Gino Melone; from the Monmouth County Office of Consumer Affairs, Mary Flaherty and Fred Rummel; from the Ocean County Office of Consumer Affairs, Leo Altobelli, Elena Marcus and Barry Wieck; and from the Union County Office of Consumer Affairs, Deborah Krauskopf and Samary Mejia.

Deputy Attorney General Jeffrey Koziar, within the Division of Law, represented the State in these matters.

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.

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