The Council
of
The City of New
York
HON. GIFFORD MILLER,
Speaker
A staff report to:
The Committee on
Oversight and
Investigations
HON. ERIC GIOIA,
CHAIR
The Committee on
Consumer Affairs
HON. PHILIP REED,
CHAIR
July 2003
Health Club
Members Beware:
Read the Fine Print
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HON. GIFFORD MILLER
SPEAKER
Members Of The Committee On
Oversight And Investigations
Hon. Eric Gioia, Chair
Hon. Tracy Boyland Hon. John C. Liu
Hon. James Davis Hon. Miguel Martinez
Hon. Alan J. Gerson Hon. Peter Vallone, Jr.
Members Of The Committee On
Consumer Affairs
Hon. Philip Reed, Chair
Hon. Joseph Addabbo, Jr. Hon. G. Oliver Koppel
Hon. Charles Barron Hon. John C. Liu
Hon. James Davis Hon. James Sanders, Jr.
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Catherine Torres
Deputy Chief of Staff
COUNCIL INVESTIGATION DIVISION
Wayne Kawadler
Director
PREPARED BY:
Vilma C. Perusina, Legislative Investigator
MAJOR CONTRIBUTORS:
Laura Gonzalez, Counsel to Council Investigation Division
WITH THE ASSISTANCE OF:
Jessica Deckard
Beatrice Jasanya
Adam Shapiro
Aline Zylberkan
COVER DESIGN BY:
Anna Maclachlan
Member Services Division
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Executive Summary……………………………………..……..p. i
Background….……………………………………..……….……p. 1
Methodology…………………..………………...……..…….….p. 2
Findings.……………………………………..…..……….….…..p. 3
Conclusion……………………………………….….…….….….p. 6
Recommendations……………………………….…..………..p. 7
Appendices
Appendix A
: List of Health Clubs…………..……..……p. A-1
Appendix B
: New York City Health Clubs…………….p. B-1
Appendix C
: Consumer Tips for Joining a Health
Club…………………………………………………………..….p. C-1
This report can be found at the Council’s website at
www.council.nyc.ny.us
New York City Council Investigation Division
Executive Summary
A New York City (NYC) Council Investigation Division (CID) investigation
has found that NYC health clubs too often fail to disclose complete and
accurate information regarding membership fees and terms to
consumers. They do this by failing to fully inform consumers of their
right to cancel memberships, to provide full membership fee information
and to permit consumers to fully review and consider membership
contracts. This failure to disclose fundamental information by health
clubs in NYC may be costing New Yorkers thousands of dollars and
locking them into long-term contracts that are difficult to break.
During these difficult economic times, New Yorkers are careful about
how they choose to spend their hard-earned dollars. Deciding to join a
health club is not just a financial decision, but a serious health matter
as well, as sixty percent of U.S. adults are overweight.
1
Thus, it is
imperative that consumers be equipped to make fully informed decisions
in this regard.
More than eight million Americans joined health clubs during 2001, and
nearly a million people joined health clubs during the month of January
2001 alone.
2
CID conducted an investigation seeking to discover the
extent to which New York City health clubs provide customers with
accurate and detailed information regarding membership fees,
termination policies and membership contract terms.
1
Office of the U.S. Surgeon General. Overweight and Obesity: At a Glance, Factsheet.
http://www.surgeongeneral.gov/topics/obesity/calltoaction/fact_glance.htm.
2
International Health, Racquet & Sportsclub Association (IHRSA). Did You Know?.
http://csdemo12.citysoft.com/IHRSA/ViewPage.cfm?pageid=625. 26 December 2002.
Health Club Members BEWARE: Read The Fine Print i
New York City Council Investigation Division
Health Club Members BEWARE: Read The Fine Print ii
CID surveyed twenty-seven (27) health clubs associated with eight (8)
different chains located throughout New York City. CID discovered the
following:
• Forty-one percent (41%) of the health clubs did not provide written
materials specifying their fees.
• Eighty one percent (81%) of the health clubs failed to provide
investigators with a contract to review off-site upon request.
• Ninety six percent (96%) of the health clubs failed to explain all the
ways in which one can terminate a membership contract under
New York State law. Fifty-nine percent (59%) explained their own
cancellation policies and/or one of the ways in which one can end
a health club membership contract under to New York State law.
In response to the investigation CID recommends the following:
• New York City Health Club Consumer Bill of Rights
Adopt legislation that would require all New York City health clubs to
supply potential new members with a document written in plain English
which describes the terms of the contract, payment options, associated
fees – including late fees and finance charges - and methods of
cancellation. The legislation would require health clubs to allow
potential customers to take a copy of the applicable contract off-site with
them for review prior to joining.
New York City Council Investigation Division
Background
Health clubs are regulated by New York State (NYS) under Article 30 of
the New York General Business Law.
1
According to NYS law, health club
membership contracts cannot exceed $3,600 per year (excluding tennis
and racquet ball facilities).
2
Also, membership contracts cannot exceed
36 months.
3
Consumers also may cancel health club membership
contracts for any of the following reasons:
• Within three days of signing the contract;
4
• If the health club ceases to offer the services stated in the
contract
5
;
• If the consumer moves 25 miles from any health club operated by
the seller;
6
or
• If upon a doctor’s order, the consumer cannot receive the services
as stated in the contract because of significant physical disability
for a period in excess of six months
7
;
• Additionally, if the customer dies, the estate may cancel the
contract and be eligible for a refund
8
.
1
N.Y. GEN. BUS. LAW §30-620, et seq (1973).
2
Id. at 623.
3
Id.
4
Id. at 624.
5
Id. at 624-3.
6
Id.
7
Id.
8
Id.
Health Club Members BEWARE: Read The Fine Print 1
New York City Council Investigation Division
Methodology
CID identified eight different health club chains throughout New York
City.
9
Twenty percent (20%) of the New York City health club locations
for each of the eight health club chains were identified for the
investigation, for a total of twenty-seven (27) sites. Of the twenty-seven
sites, two were located in the Bronx, seven in Brooklyn, fourteen in
Manhattan, and four in Queens.
Following each visit, investigators completed a survey regarding:
• Membership fees, including installment or monthly payment
arrangements and related finance charges;
• Cancellation policies; and
• Whether potential customers were permitted to take the
membership contract with them for review prior to joining.
9
CID investigators visited the following eight (8) health club chains: Bally Total Fitness Club, Crunch,
Dolphin Fitness Club, Equinox, Gold’s Gym, Lucille Roberts, NY Health & Racquet Club, NY Sports
Club.
Health Club Members BEWARE: Read The Fine Print 2
New York City Council Investigation Division
Findings
The following results are based on the twenty-seven sites that were
visited by the investigators throughout New York City:
• Sixteen (16), or fifty-nine percent (59%) of the health clubs
provided written materials specifying their fees. Eleven (11), or
forty-one percent (41%) of the health clubs did not provide
written materials specifying their fees.
• Twenty-seven (27), or one-hundred percent (100%) of the health
clubs allow customers to pay membership dues on a monthly
basis.
• Six (6), or twenty-two percent (22%) assess finance charges on
monthly dues payments. Twenty-one (21), or seventy-eight
percent (78%) do not assess finance charges on monthly dues
payments.
• Five (5), or nineteen percent (19%) of the health clubs provided
investigators with a contract to review off-site upon request.
Twenty-two (22), or eighty-one percent (81%) of the health clubs
did not provide investigators with a contract to review off-site
upon request.
10
o Of the five health clubs that provided investigators with a
contract upon request to review off-site, four (4)
accurately explained the contents of the contract to the
investigators when handing out the contract upon
request. One (1) did not accurately explain the contents of
10
Investigators were able to obtain contracts to take home from the following health clubs: Crunch,
Equinox, Lucille Roberts, and New York Sports Club.
Health Club Members BEWARE: Read The Fine Print 3
New York City Council Investigation Division
the contract to the investigators when handing out the
contract upon request.
Availability of Contracts
Did Not Provide
Contracts
81%
Provided
Contracts
19%
Provided Contracts
Did Not Provide Contracts
• Only one (1), or four percent (4%) of the health clubs explained
all the ways in which a health club membership contract could
be terminated under New York State law. Ten (10), or thirty-
seven percent (37%) of the health clubs explained two of the
ways in which one can cancel a health club membership
contract according to New York State law. Sixteen (16), or fifty-
nine percent (59%) of the health clubs explained their own
cancellation policies and/or one of the ways in which a
consumer can terminate a health club membership contract
according to New York State law.
11
11
See “Background” section, pg. 1, for more details.
Health Club Members BEWARE: Read The Fine Print 4
New York City Council Investigation Division
4%
37%
59%
0%
20%
40%
60%
80%
100%
Explained all Explained 2 ways Explained one and/or their
own
Disclosure of New York State Cancellation Policy
0%
100%
14%
86%
21%
79%
25%
75%
0%
20%
40%
60%
80%
100%
Bronx Brooklyn Manhattan Queens
Availability of Contracts by Borough
Provided Contracts Did Not Provide Contracts
Health Club Members BEWARE: Read The Fine Print 5
New York City Council Investigation Division
Conclusion
Unfortunately, the results obtained during this investigation reveal how
difficult it can be for a customer to obtain detailed and consistent
information when shopping for a health club membership. For example,
slightly over forty percent (40%) of the surveyed health clubs failed to
provide any written materials describing membership fees. Moreover, a
mere four percent (4%) of the surveyed health clubs explained to
investigators the various ways under New York State law in which a
customer can cancel a health club membership.
Importantly, CID also found that only nineteen percent (19%) of the
health clubs surveyed provided investigators with contracts to review off-
site upon request prior to joining. Not being able to obtain a contract for
quiet review can be problematic, since customers can be pressured into
signing a contract without being given enough time to understand all the
clauses and read the fine print. For example, upon further review and
consideration, a customer may elect not to choose a monthly payment
installment plan, depending on the applicable fees for such a service.
Finally, since some contracts can legally last up to thirty-six months,
and circumstances can easily change during such a time-period, it is
extremely important that customers be fully informed of their rights,
including their termination rights, when they enter into a health club
contract.
Health Club Members BEWARE: Read The Fine Print 6
New York City Council Investigation Division
Health Club Members BEWARE: Read The Fine Print 7
Recommendations
New York City health clubs would be required to supply customers with
a plain English written disclosure outlining the terms of the contract,
payment options, associated fees – including late fees and finance
charges - and methods of cancellation. Potential customers would also be
permitted to take a copy of the applicable contract off-site with them for
review prior to signing.
New York City Council Investigation Division
Health Club Members BEWARE: Read The Fine Print
A-1
APPENDIX A:
List of Health Clubs
List of Health Clubs
Health Club Location Borough
Bally Total Fitness Club
2530 Flatbush Ave. Brooklyn
139 W. 32th St (bet. 6th & 7th Ave.) Manhattan
80-02 Kew Gardens Rd. Queens
Crunch
25 Broadway Manhattan
1109 2nd Ave. (bet. 58th & 59th St.) Manhattan
Dolphin Fitness Club
2030 Eastchester Rd. Bronx
5322 Avenue N Brooklyn
8701 4th Ave. (& 87th St.) Brooklyn
242 East 14th St. (bet. 2nd & 3rd
Ave.)
Manhattan
Equinox
344 Amsterdam Ave. (bet. 76th &
77th St.)
Manhattan
54 Murray St. Manhattan
Gold's Gym
85 Livingston St. Brooklyn
Lucille Roberts
2449 Morris Ave. Bronx
540 Fulton St. Brooklyn
40th & 8th Ave. Manhattan
54-32 Myrtle Ave. Queens
NY Health & Racquet Club
39 Whitehall St. (bet. Whitehall &
Water)
Manhattan
110 W. 56th St.(bet. 6th & 7th Ave.) Manhattan
NY Sports Club
179 Remsen St. Brooklyn
110 Boerum Pl. Brooklyn
10 Irving Pl. Manhattan
270 8th Ave. (& 23rd St.) Manhattan
2162 Broadway (& 76th St.) Manhattan
2311 Frederick Douglass Blvd. Manhattan
503-511 Broadway Manhattan
69-47 Austin St. Queens
153-37 Cross Island Parkway Queens
New York City Council Investigation Division
Health Club Members BEWARE: Read The Fine Print
B-1
APPENDIX B:
New York City Health Clubs
New York City Health Clubs
Health Club No. in NYC
20% of Total No. Chosen
Bally Total Fitness 15 3 3
Crunch 10 2 2
Dolphin Fitness Club 19 3.8 4
Equinox 12 2.4 2
Gold's Gym 6 1.2 1
Lucille Roberts 18 3.6 4
NY Health & Racquet Club 8 1.6 2
NY Sports Club 43 8.6 9
Total 131 26.2 27
Sources:
Bally Total Fitness: http://bally.know-where.com/BallyFitness2/
Crunch: http://www.crunch.com/gyms/index.asp
Dolphin Fitness Club: http://www.dolphinfitnessclubs.com/locations.html
Equinox: http://www.equinoxfitness.com/home/flash/1/region/2
Gold's Gym: http://www.goldsgym.com
Lucille Roberts: http://www.lucilleroberts.com/club-locator.php
NY Health & Racquet Club: http://www.hrcbest.com/main/location.html
NY Sports Club: http://www.nysc.com/know_where/know_where.asp
New York City Council Investigation Division
Health Club Members BEWARE: Read The Fine Print
C-1
APPENDIX C:
Consumer Tips for Joining a Health Club
CONSUMER TIPS FOR JOINING A HEALTH CLUB
1. Visit or call at least two other health clubs to
learn about dues, fees and services;
2. Ask for a free pass before you sign the contract to
determine if the club is right for you;
3. Talk to other members;
4. Visit the health club during the hours that you
will normally be attending.
5. Take time to think about joining and read the
contract. Take it home and make sure that you
understand it.
6. Under New York Law, you have 3 day cooling off
period. That means that you have 3 days from the
day you sign the contract to cancel the contract.
7. If you sign the contract but decide to cancel, keep
a copy of the cancellation letter. Ensure that it is
date and time stamped and signed by a club
official.
