This is an ongoing investigation and pending class action lawsuit against 24 Hour Fitness USA Inc. alleging unfair business practices that may have violated consumer protection laws:
1) 24 Hour Fitness offers membership plans referred to as the "Monthly Plans", and which they advertise as "monthly (pay as you go, no long-term contract) memberships." 24 Hour Fitness engages in a systematic and routine sales practice of advertising that the Monthly Plans have a "30 day cancellation policy" and that members can cancel "at any time." 24 Hour Fitness advises prospective members that they will be charged first and last month's fees upon instigation of the membership. Because last month's fees are paid upon enrollment, a consumer should owe no further fees upon a 30-day cancel anytime monthly pay as you go membership.
2) Contrary to the representations, 24 Hour Fitness does not employ a cancellation policy which permits a consumer to cancel "at any time" upon 30-days notice. 24 Hour Fitness does not sell such a plan.
3) 24 Hour Fitness refuses to provide consumers with a copy of a contract, or any document containing the contractual terms of membership, before a consumer agrees to enroll. Indeed, 24 Hour Fitness advises consumers that Monthly Plans do not have a contract. 24 Hour Fitness further advises that they cannot provide the consumer with written terms of the membership plan until after consumers have agreed to enroll, have provided their personal and billing information, and have been entered into the computer system. Once the foregoing has taken place, 24 Hour Fitness then requests that the consumer sign a document, which they tell the consumer is not a contract, and in which 24 Hour FItness has switched the cancellation policy to a long term obligation, requiring the consumer to remain a member and pay fees for a minimum of 60 days after notice of cancellation.
4) 24 Hour Fitness thus does not permit a consumer to cancel at any time with only a 30 day cancellation period, as a consumer is always charged for at least 60 days of membership (inclusive of pre-paid last month fees) after the consumer notifies Defendants of cancellation. The Monthly Plan membership sold to consumers is thus not a 'pay as you go, no long-term contract' membership nor a membership which can be cancelled at anytime with a 30 cancellation period.
5) In practice, 24 hour Fitness delays the effective date of the cancellation notice until the beginning of the next billing period. A consumer is thus required to remain a member and pay fees for 60 days plus the number of days between the date notice of cancellation is given and the date of the consumer's next billing cycle.
6) In order to pressure a potential consumer into immediately signing up for membership, 24 Hour Fitness engages in a pattern and practice of advising all potential consumers that the Defendants are currently offering a "special" which will expire that day or soon thereafter. 24 Hour Fitness, in fact, offer some sort of "special" every day. Because a "special" is always offered, the fees which 24 Hour Fitness advises potential customers are the "regular" rates are not, in fact, regularly employed, if at all. In truth, a consumer will always be offered some type of "special," and thus should never feel pressure to sign up immediately.
Name (Stock Symbol)
24 Hour Fitness
24 Hour Fitness operates more than 425 clubs in 16 states with three million club members and more than 20,000 employees. 24 Hour Fitness also operates two dozen clubs in five Asian countries. In 2005, the company was sold to New York-based private equity firm, Forstmann Little & Co. for $1.6 billion
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