FTC Sues Gym Chains for Difficult Cancellation Procedures

The FTC recently filed a complaint in the U.S. District Court for the Central District of California, seeking, among other relief, a permanent injunction against two companies that operate multiple gym chains for practices including difficult membership cancellation procedures. 

The complaint alleges UDAP violations of the FTC Act, and violations of the Restore Online Shoppers’ Confidence Act (ROSCA).  The ROSCA violations are related to the companies’ alleged failures regarding required practices, including inadequate disclosures and no simple cancellation mechanism, when using a negative option feature.

The FTC alleges that the companies make it difficult when customers want to cancel membership and other charges, such as towel service, that are recurring, causing harm like unwanted recurring fees in the hundreds of millions of dollars.  For example, the FTC alleges that one of the only ways to quit the gym is to:

• Access the customer’s account on the gym’s website;
• Generate the cancellation form;
• Print the form;
• Take it in person to the gym during limited hours;
• Find the authorized processing manager (who may not be there or available); and
• Wait for the manager to process the form.

The FTC alleges that it has received tens of thousands of complaints about the companies’ cancellation practices.