HARRISBURG, Pa. (Legal Newsline) - Members of a suburban Philadelphia gym could be seeing partial refunds as part of a consumer protection settlement filed by state Attorney General Tom Corbett this week.
Exton, PA Gym LLC, doing business as Gold's Gym of Exton, Pa., as well as Kenneth B. Lehman, chief operating officer and vice president of the company, were accused of using improper contracts and other violations of the state's Health Club act, leading to this week Assurance of Voluntary Compliance.
The Gold's Gym of Exton was alleged to have sold health club memberships that required a one-year commitment without first registering the club with the attorney general's office. The club was also alleged to have used membership contracts that were not in compliance with state law and accepted payments in excess of the first month's dues, a violation of the Health Club Act.
The Health Club Act requires health clubs offering memberships of more than one year or collecting more than three months of membership dues in advance to file a letter of credit or bond with the attorney general's office to protect consumers from financial losses stemming from a club closing before their membership is up.
"Health club memberships can be expensive investments for consumers," Corbett said. "The Health Club Act was created to ensure that consumers get clear and accurate information about their membership agreements up-front, before they make a purchase.
Under terms of the settlement agreement, Gold's Gym of Exton is required to give approximately 1,400 consumers the option of either signing a new contract that is in compliance with the Health Club Act or canceling their existing contract and receiving a refund for the unused portion of their membership.
The gym is also required by the agreement to revise its health club contracts and payment collection procedures to bring it into compliance with the Health Club Act. The gym must also register all fictitious business names with the Pennsylvania Department of State.
The assurance of voluntary compliance also requires payment of $3,000 in civil penalties by Gold's Gym of Exton as well as a $2,000 payment for future consumer education and consumer protection activities.
Corbett said that his Bureau of Consumer Protection has also recently been alerted to the closing Gold's Gym of Oaks, located in Montgomery County, another health club owned and operated by Mr. Lehman.
Under the Health Club Act, clubs that close are allowed to transfer their memberships to a comparable facility within 10 miles of the original location. Members who joined the club within 30 days of the closing are entitled to cancellation of their contracts and refunds.