Health club reaches settlement with Maryland AG
BALTIMORE (Legal Newsline) - Maryland Attorney General Doug Gansler announced on Wednesday that he has reached a settlement with a Baltimore County health club and its owner resolving allegations of unlawful billing practices.
GRS Fitness LLC and its owner, Bernard P. Caplan Jr., allegedly made false statements to consumers about their cancellation rights, charged improper fees, discontinued services unfairly and attempted to collect on debts not owed.
"People join fitness clubs to get healthy and lead an active lifestyle, not to get charged for services they don't receive," Gansler said. "This settlement is good news for consumers and puts health club owners on notice that such deceptive practices will not be tolerated."
Under the terms of the settlement, Caplan and GRS Fitness will stop billing members of Health Tek Creations LLC. Health Tek operated a health club located in Essex under the trade name Energy Fitness Center. It sold the business to GRS Fitness, which began to operate the facility as a Spunk Fitness franchise on approximately July 7, 2010.
Caplan and GRS Fitness agreed to pay restitution to any Health Tek member who cancelled their membership following the ownership change. This includes any registration or start-up fees, cancellation charges, regular dues and payments received through debt collection activity. In addition, Caplan and GRS Fitness agreed to submit to binding arbitration of any future consumer complaint that cannot be resolved through mediation.
The settlement resolves the allegations that Caplan and GRS Fitness substantially changed the fitness services at the existing facility, including the removal of plate-loaded free weights and other heavy lifting equipment, but continued to charge members the same price as before, telling members who desired to cancel their membership due to the substantial change in services that they would only be allowed to do so if they made payment of a special fee.
In addition, Caplan and GRS Fitness allegedly assessed improper cancellation fees to discontinue memberships and charged improper start-up fees to switch memberships to the lower-priced GRS Fitness contract in addition to inappropriately subjecting members who stopped paying on their Health Tek contracts to collection activity, including mail and telephone calls requesting payment from the member that was not owed due to the substantial change in services.
Caplan and GRS Fitness denied any wrongdoing but agreed to take measures to resolve the allegations, including direct payment to Health Tek members of improperly charged special dues and fees. Caplan and GRS Fitness also agreed to pay a penalty to the CPD in the amount of $50,000, which will be reduced to $10,000 if all restitution due under the agreement is paid.