Health Clubs Agree to Provide Consumer Restitution and Play by the Rules

Seattle – Oct. 23, 2001 - Consumers who failed to receive promised services from two Washington fitness clubs can receive refunds under an agreement filed today in King County Superior Court, Attorney General Christine Gregoire announced.

In documents filed with the court, 24 Hour Fitness agreed to refund money to consumers who purchased memberships in two unfinished facilities in downtown Seattle and Lynnwood. Meanwhile, the owner of the now-closed Gold’s Gym franchise in Bellevue agreed to make refunds to that club’s members.

The Attorney General’s Office claimed the two businesses violated the Health Studio Services Act, which was passed in response to widespread consumer abuses.

According to state attorneys, 24 Hour Fitness did not complete construction of the facilities within 12 months after the start of membership "pre-sales," as required under state law.

An investigation conducted by the Attorney General’s Consumer Protection Division determined that 24 Hour Fitness and its parent company, Fitness Holdings, Inc., sold more than 5,000 memberships – valued at $250 each – to the two unfinished clubs. Membership sales began in January 2000, but one of the facilities fully opened in July 2001, seven months beyond the required opening date. The other opened earlier this month, eight months beyond its required opening.

Under terms of the agreement with 24 Hour Fitness, the company will notify consumers who purchased advance memberships of their right to restitution, and will pay the restitution to consumers who request it. It also agreed to deposit pre-opening membership fees into a trust account or to purchase a construction bond when pre-selling memberships in facilities under construction.

In addition, 24 Hour Fitness will pay $29,000 in costs and fees and file a report with the Attorney General's Office at the conclusion of its restitution program.

In the other case, members of the Gold's Gym Bellevue franchise were left high and dry on March 9, 2001, when the club closed and failed to reopen or refund membership fees, as required by state law.

The owner of the Bellevue franchise has agreed to make refunds to consumers who were not given pro-rated refunds or memberships in alternative facilities within 10 miles of the closed club.

Members will be notified by Gold's of their right to obtain refunds, which will be made over the next six months. Gold's will also file a report with the Attorney General's Office detailing the results of its refund program.

"Not only will we review these reports to ensure these companies live up to the terms of these agreements, we intend to closely monitor consumer complaints in the future to make sure people get what they pay for, " said Gregoire.

-30-