Crackdown on Lengthy and Unfair Gym Contracts

February 1, 2013

A crackdown on overly stringent gym contracts is to take place after a court ruling against a company that is responsible for membership services in 1,000 gyms across Britain.

 

The Office of Fair Trading brought court action against Ashbourne Management Services, which is responsible for making agreements and collecting payment from 50,000 gym-goers. According to OFT, Ashbourne had contracts that ran from one to three years, but if a member wanted to cancel their membership at any time, even if it was due to extenuating or unforeseen circumstances, they were forced to pay the whole sum immediately, for the entire minimum contract period.

If members refused or were unable to pay, Ashbourne threatened to damage their credit rating by referring the debt to a credit reference agency. It was found that Ashbourne followed through with its threat, and as of July 2009 had registered 17,000 defaults with credit rating agencies.

The court hearing, which lasted for four days, ruled that a gym contract was unfair if it lasted for more than one year and did not allow the member to cancel within 30 days. Mr Justice Kitchin stated that Ashbourne’s business model, “is designed and calculated to take advantage of the naivety and inexperience of the average consumer using gym clubs at the lower end of the market.”

OFT director Jason Freeman said of the Ashbourne ruling, “We have received many complaints about Ashbourne’s contracts, and many consumers have felt pressured into paying sums of money that they believed they did not owe. We are pleased that the court has confirmed that these practices are unlawful, and this should bring peace of mind to many people who have fallen into the trap of signing up to these lengthy gym contracts.

“Unfair terms that unreasonably bind consumers into long contracts they cannot leave, and heavy-handed collection techniques, have no place in businesses’ dealings with consumers.”

Since last year’s ruling against Ashbourne, Virgin Active has changed its contracts to make them fairer to members, and the OFT are now looking at major chains such as L.A. Fitness, Bannatyne’s and Fitness First, making sure their small-print is in line with the new ruling.