NEW YORK — New York Attorney General Eliot Spitzer recently announced an agreement with Bally Total Fitness Corp. that Spitzer said will “significantly reform its sales and advertising practices.”
Bally, which operates nearly 40 health clubs throughout the state, settled an investigation by Spitzer's office after hundreds of consumers complained that deceptive ads and high pressure sales tactics tricked them into signing long-term contracts and misrepresented the total price of the memberships.
“People joining health clubs expect trimmer bodies, not trimmer wallets,” Spitzer said. “This agreement will help consumers better understand terms and condition of their membership and get the most for their money.”
The agreement requires Bally to implement substantial sales, training and advertising reforms far greater than the law requires. In addition, the settlement requires Bally to improve its cancellation policies and better monitor its compliance with those policies, the Attorney General's office said. Bally also agreed to provide pro-rata refunds to certain consumers who were misled about the legally binding nature of their contract or were improperly denied the right to cancel.
“We didn't agree to anything we haven't been doing already. This is actually old news, as most of these inquiries date back several years and do not reflect the company's operations today,” Jon Harris, vice president of Media Development and Communications for Bally, said in a release. “In fact, many of the policies referred to in this agreement were voluntarily and independently changed by Bally several years ago.”
Since 1999, approximately 600 individuals have contacted Spitzer's office about Bally. Consumer complaints included misrepresentations by Bally employees about the terms of the memberships insofar as whether the contract was binding or could be cancelled. As a result, individuals — many of whom had only limited proficiency in English or were young, inexperienced consumers — did not know they were signing binding three-year contracts, Spitzer's office said.
Many consumers also complained that Bally denied their requests for cancellation even though they were exercising their rights under state law. Spitzer's office also received complaints concerning Bally's renewal practices and the conditions, services and facilities at some Bally clubs.
The settlement prohibits the Chicago-based company from misrepresenting the terms of its memberships and consumers' cancellation rights. In addition, the agreement specifically requires Bally to:
Provide new members with at least a seven-day cancellation period, longer than required by law;
Provide new members with a copy of their contract together with a separate handout that describes key features of the membership purchased; the full cost of the membership; and additional costs for services, such as personal training or exercise classes, not included in the membership;
Have a senior sales member meet with each new member to ensure that individuals understand that their contract is legally binding, to review the terms of the contract, and to ensure that consumers understand its terms, and their cancellation rights;
Make follow-up phone calls to ensure that new members fully understand the terms of their contract and to identify potentially problematic transactions;
Provide extensive training to employees that specifically addresses prohibited sales practices and the consequence of engaging in such practices, including possible lost commissions and termination;
Adopt procedures for monitoring the conduct of Bally health club employees, including regular on-site inspections and random “shopping” of its New York health clubs and tracking of complaints according to individual sales representatives;
Offer specially designated student memberships with terms shorter than Bally's typical three-year membership contract;
Provide translations of its contracts in Spanish to all consumers who negotiate the transaction at least in part in Spanish or who otherwise request a Spanish version of the contract.
In settling the investigation, Bally agreed to pay $200,000 to the state for the cost of the investigation.