Four firms give the OFT undertakings about selling gym membership

15 October 2009

The Office of Fair Trading has received undertakings from four firms to make changes in the way they market and sell gym membership agreements. Millennium Experience (Direct Marketing) Ltd Matters Consulting Ltd, Millennium Experience Ltd, and Fitlife Ltd, along with their directors, have agreed to change their practices relating to the promotion and selling of gym membership through credit agreements and their subsequent pursuit of payments.

Consumers received unsolicited leaflets from Millennium Experience (Direct Marketing) Ltd informing them they had won a 'free' gift from a local business. They were asked to contact a second firm, Matters Consulting Ltd, who told them they had won a gym membership and invited them to attend a local gym to collect their gift. 

At the gym, consumers met a representative of a third company, Millennium Experiences Ltd, who told them that although their membership was 'free' there was a 'service charge' of approximately £4.11 per week. Some customers deciding to subscribe thought they were signing a standing order mandate but they were actually entering into a two-year credit agreement with a fourth firm, Fitlife Ltd.

The OFT claims that consumers signing up to the gym membership should have been given the right to cancel within a few days of signing, which the companies failed to do.

In many cases the credit agreements did not comply with the Consumer Credit Act 1974, because 'pre-contact information' was not properly supplied to enable consumers to assess what the credit agreement actually entailed. Further, consumers also had a right to cancel the credit agreements within a few days after signing, and the credit agreements should have included a section setting out that right to cancel and how it could be exercised.

The failure to meet these requirements makes credit agreements unenforceable without a separate court order. Many consumers were subsequently pursued for unpaid fees and threatened with court proceedings or follow-up action from debt collection firms.

The companies, and their named directors, have given undertakings which include that they will, as appropriate to their role in the business practices:

• not describe a product as 'gratis', 'free' or 'without charge' if the consumer has to pay any costs  other than anticipated ones
• make clear to consumers where they are required to sign a credit agreement in order to receive any product.
• provide cancellation rights in future, where the law requires this
• not instruct debt collectors to pursue consumers for unpaid fees in circumstances where the credit agreements are unenforceable without a court order.

Consumers who may have a credit agreement with Fitlife Ltd and were not given prior information on cancellation rights should seek legal advice, or contact Consumer Direct, telephone 08454 04 05 06 or their local authority Trading Standards Service as their agreement may be unenforceable.

oft.gov.uk 

Debtwizard comment

This is not the first time consumers have had problems with gym membership agreement, and it won't be the last.

Anyone that feels their membership terms and conditions are unfair should inform the relevant gym and any firm that has been instructed to pursue the no  payment 'that this alleged debt is in dispute'. If the matter continues then I advise contacting the Office of Fair Trading (OFT) or your local trading standards officer. 

Just click on any of the following to understand more about your consumer rights;

Harassment, know your rights

Office of Fair Trading (OFT) Debt Collection Guidelines

Credit Services Association (CSA) Debt Collection Guidelines

Credit Services Associations (CSA) List of Members

Office of Fair Trading contact details 

We have now formed a guidance document when dealing with firms chasing you for cancelled membership fees.

Although it’s really not our place to give legal advice this article should give you some grounding – do your own research and stand your ground. If more people stood up for their rights it won’t take long for the clubs to amend their contracts and the cowboys will go out of business.

DebtWizard guide to Gym Membership Fees