Bryan Cohen Apr. 6, 2011, 2:14am
RALEIGH, N.C. (Legal Newsline) - North Carolina Attorney General Roy Cooper announced a statewide enforcement sweep on Tuesday to ensure that North Carolina health clubs were prepared to pay refunds to members if the clubs close down.
Under state law, health clubs, martial arts studios, dance studios and dating services are required to have a letter of credit or a bond to cover prepaid contracts in case they go out of business and need money to repay customers. Businesses are required to file sworn statements with the Attorney General's Office about their bonds twice annually.
"My office hears every week from people whose gym shut down, leaving them in the lurch," Cooper said. "Fortunately, North Carolina law requires health clubs to set aside money for refunds and we want to make sure that businesses are following the law so consumers are protected."
So far, as part of the enforcement sweep, Cooper has filed lawsuits and entered consent judgments with two facilities for a total of $29,000. Three other companies agreed to settlements totaling $5,000 while 11 facilities came into compliance with the law after receiving a letter from Cooper's office.
Cooper said that former members from several health clubs have gotten their money back recently from defunct clubs in Greensboro, N.C., and Robinhood, N.C., and that consumers are in the process of getting refunds from former members of clubs in High Point, N.C., and Jamestown, N.C.
Over the past several years, Cooper's Consumer Protection Division has recovered money for hundreds of North Carolinians who were members of gyms, health clubs or dating clubs that have closed down. The funds returned have been equal to more than $500,000.