Maryland Attorney General Douglas Gansler reached a settlement with a Baltimore health club owner who agreed to stop unlawful billing practices and pay restitution to members.
The settlement was reached last week between the Consumer Protection Division of the Maryland Attorney General Office and GRS Fitness LLC, which is owned by Bernard Caplan Jr.
GRS Fitness purchased Energy Fitness Center in Essex, MD, from Health Tek Creations LLC and began operating the club as a Spunk Fitness franchise in July 2010. Even though some members requested cancellation of their contracts after GRS Fitness bought the club, GRS Fitness continued to bill them. Under the settlement, GRS Fitness will stop billing these members and will pay restitution to them.
Caplan and GRS Fitness faced allegations of removing plate-loaded free weights and other equipment from the club while continuing to charge members the same rate as Energy Fitness. Members who wanted to cancel because of this change were told that they could do so only if they paid a special fee.
Caplan and GRS Fitness agreed to pay a $50,000 penalty to the Consumer Protection Division. The penalty will be reduced to $10,000 if all restitution due under the agreement is paid.
Other allegations included improper cancellation and start-up fees as well as subjecting members who stopped paying due to the change in services to collection activity that included phone calls and mail requests for money that was not owed.
Caplan and GRS Fitness denied any wrongdoing but agreed to resolve the allegations, including direct payment to members.