1 Aug 2011

Gyms found to have breached disclosure requirements

9:02 pm on 1 August 2011

The Commerce Commission says gyms could be breaking the law when they ask people to pay for membership by instalments.

It says thousands of people may have entered into gym membership contracts without knowing their rights to full information.

The commission says it is fundamental to consumers' rights that they are given all information when they sign a credit contract.

The gym membership contracts are known as consumer credit contracts, are paid by instalment and subject to fees or interest.

The commission investigated 13 randomly selected gyms and found that most credit contracts failed to advise customers how much extra they were paying than if the membership was paid in a lump sum.

The credit contracts also failed to disclose the exit fee and any unpaid balance that customers would pay to cancel the contract.

The Commerce Commission says it is warning gyms to seek legal advice on instalment contracts or it will take enforcement action.

Gyms who breach disclosure requirements of the law may face a court fine of up to $30,000 and may be banned from providing consumer credit.