RALEIGH, NC – Peak Fitness, a North Carolina chain that is facing a lawsuit from the state Attorney General’s Office, agreed Wednesday to stop running misleading advertisements and to set aside money to cover future refunds.

Attorney General Roy Cooper filed suit last week against the clubs, former owner Randall Rohm and current owner Jeff Stec, according to the Raleigh (NC) News & Observer. The ongoing lawsuit seeks refunds for customers and the cancellation of pre-paid contracts that violated North Carolina state law.

According to the lawsuit, Peak Fitness, which formerly operated as Beyond Fitness, advertised that members could use 34 locations for $19.99 a month. But fine print in the advertisement states that the price is based on a 24-month membership. Instead of paying $19.99 monthly, members are required to pay $479.76 upfront, the newspaper reported.

The chain agreed to the changes before a court hearing that was scheduled for Wednesday, a hearing at which the Attorney General’s Office had planned to ask a judge to require the chain to change its practices, the News & Observer reported. The club owners agreed to amend the advertisements and ensure that the members’ contracts include information about their three-day right to cancel, according to the Attorney General’s Office.

The News & Observer also reported that the chain will provide the Attorney General’s Office with evidence of bonds for the former Beyond Fitness clubs. North Carolina law requires health clubs to maintain a bond that can be used to pay refunds if a club goes out of business.

The Attorney General’s Office began investigating Beyond Fitness in 2005 after receiving complaints from unhappy customers. Most of the complaints came after Beyond Fitness took money upfront for memberships for a planned location that never opened, the office said.

The Attorney General’s Consumer Protection Division has recovered more than $50,000 in refunds for 182 customers who bought memberships for the location that never opened, the newspaper reported.

There are 211 complaints that remain unresolved against Beyond Fitness clubs, according to the News & Observer. In addition to charges of deceptive advertising, the complaints received by the Attorney General’s Office deal with unsuitable facilities and equipment, improper billing, unpaid refunds, bounced checks and collection practices.

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