Gym membership cancellation fees
Every now and again we see gym memberships in the spotlight. According to the Sydney Morning Herald one survey showed that one large American gym chain sells about 6000 memberships for a 300-capacity gym. You can read their article here. The government warns you on the NSW Fair Trading website that the cancellation fees can be $300.
In Queensland if you cancel during the cooling off period, or because you are sick or injured, the fees have been capped to $75 or 10% of your gym membership, whichever is higher. However according to their version of fair trading it is still open slather if you cancel 'by choice', you can read about that here.
No fines or punishment
It is old law, called common law meaning law created by the Courts, that a non-government body cannot fine or punish somebody. They can have fees that represent the reasonable cost of an event to the business and this is where it gets difficult because three different accountants would measure the reasonable costs of business three different ways.
What is a reasonable cost of business?
So what is a reasonable cost of business for a gym operating in NSW, and in particular the reasonable cost of a lost customer. Most gyms are significantly over booked and if even half of the customers turned up at once they would have to turn people away because of DA's and fire regulations. It cannot be that every customer signed up is a lost opportunity to sign up someone else. They are not turning customers away because they are full.
So what is the reasonable cost per customer, we don't know yet as no one has challenged the gyms in Court.
What should I do?
If you need to cancel your gym membership, first of all do it in writing regardless of how the contract tells you you can do it. If they say you can do it on the phone fine, do it on the phone, but follow that up with an email (if they will give you an address) or a letter confirming that you have cancelled. This is to remove the argument about what date you cancelled on.
Secondly, after you have cancelled, write to them and ask them to verify how they have calculated the cancellation fee.
Thirdly, check if you can cancel the direct debit. One reason for cancelling the direct debit might include failure to provide a service, particularly if they won't answer the question you have asked at step 2.
Fourthly, write to your local member of State Parliament. At the moment in Penrith that is Stuart Ayres, you can contact him here. In Queensland they have clearly started reviewing the fitness industry and their fees. Alternatively you could lodge a complaint with the ACCC, you can lodge a complaint by clicking here. These things may not help you immediately, but as with most problems if people don't speak up then nothing will happen. Complain and then tell all your friends who have also had the same problem to complain. If the issue becomes popular enough the government will do something.
If you would like to read some more articles about 'civil wrongs' then click on the blue button to the right.