WIREDGOV

Health and fitness club operators LA Fitness and Dave Whelan Sports ('DWS'), which together have nearly half a million members, and Harlands Group, a gym management company which manages over 900,000 customer contracts, have agreed to give consumers better cancellation rights and make their contract terms more transparent following an OFT investigation.

This follows agreement earlier this year by Bannatyne Fitness Limited, David Lloyd Leisure Limited and Fitness First Clubs Limited to change their contract terms.

The OFT is also today writing to 20 other health and fitness operators, highlighting contract terms and commercial practices which may be considered unfair and advising them to review their contract terms.

The undertakings to the OFT from LA Fitness, DWS and Harlands Group include:

• extended rights for members to cancel their contracts early should their circumstances change in a way that makes attendance at the gym difficult or unaffordable - for example if they lose their job or suffer an injury
• a commitment not to describe membership as being of a fixed duration, if the contract automatically continues on a rolling basis after the initial membership period has expired
• greater transparency about key membership features, including initial membership periods and cancellation rights, and for these to be provided upfront as part of the sales process.

Cavendish Elithorn, OFT Executive Director, said:

'As a result of our investigation, millions of gym members now have better contract terms, including improved cancellation rights that prevent them being unfairly locked in if their circumstances change. This should be a warning to the rest of the industry that we will not hesitate to take action where we find evidence of consumers being treated unfairly. 

'Anyone considering joining a gym or health club should carefully consider the contract terms before signing up. Consumers should shop around and ask questions. Alarm bells should ring if gyms are not being clear and upfront about their terms and conditions, including the length of the contract and cancellation rights. If consumers are told something that is not in the terms and conditions, they should ask for written confirmation.' 

The OFT and Trading Standards will continue to monitor compliance with the undertakings given by each business.

NOTES

1. See the case closure summary for further details of the OFT's investigation, including copies of the undertakings.
2. Undertakings under Part 8 of the Enterprise Act 2002 were given by LA Leisure Limited, Dave Whelan Sports Limited, and Harlands Group Limited and its associates Harlands Services Limited and Harlands Finance Limited and relate to alleged breaches of the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs) and the Consumer Protection from Unfair Trading Regulations 2008.
3. In March 2013, Bannatyne Fitness Limited, David Lloyd Leisure Limited and Fitness First Clubs Limited also gave undertakings in which they agreed to change their contract terms to make them more transparent and give their members better cancellation rights.
4. The OFT investigation followed the enforcement order the OFT secured from the High Court in August 2011, which prevents Ashbourne Management Services Limited, a gym management company, and its directors from recommending, using or relying on certain unfair contract terms and prohibits a number of its debt collection practices which amount to unfair commercial practices. 
5. The UTCCRs protect consumers against unfair standard terms in contracts they agree with traders. The OFT and other bodies can take legal action to prevent the use of potentially unfair terms. A term is likely to be considered unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations under the contract, to the detriment of consumers. A consumer is not bound by a standard term in a contract with a trader if that term is unfair. Ultimately, only a court can decide whether a term is unfair. However consumers may seek to rely upon the legislation in legal proceedings, including as part of proceedings they have brought themselves. 
6. To help businesses understand their obligations under UTCCRs, the OFT has launched a new online resource, the Unfair Terms Hub, which provides businesses with quick and easy to understand guidance on business-to-consumer agreements.
7. In December 2012, the OFT issued a consumer alert advising consumers of their rights when joining a health and fitness club.
8. 'Health and Fitness Clubs - UK' Mintel (June 2013) reported that DWS has 275,000 members and LA Fitness has 200,000 members.
9. Figures relating to Harland were provided by the company.
10. The OFT currently has 21 civil consumer enforcement cases open.