Attorney General Cuomo Secures Refunds For Members Of Now-defunct La Weight Loss Centers

ALBANY, N.Y. (February 5, 2008) - Attorney General Andrew M. Cuomo today announced that his office has secured $275,000 from LA Weight Loss Centers, Inc. in order to provide refunds to thousands of customers across the state who paid for but never received services after the now defunct company closed its doors in January 2008.

Statewide thus far, the Attorney General’s Office has identified more than 100 consumers who were affected by the closures and will receive restitution as part of the agreement.

“As more companies fall victim to the harsh economy, they still have an obligation to abide by the law and be forthright with their patrons,” said Attorney General Cuomo. “Many New Yorkers who paid for and never received services from LA Weight Loss now have some vindication, and my office will continue to seek recourse for consumers who are defrauded across the state.”

In January 2008, the company closed all of its approximately 45 weight loss centers located across New York state. Shortly after that, the company filed for Chapter 7 Bankruptcy in the Bankruptcy Court in Philadelphia, Pennsylvania. Consumers from across New York state complained to Attorney General Cuomo’s Office that they did not receive a refund from the company or have not had the charges removed from their credit cards for advance payments made for services and/or products which they never received.

Under the terms of the agreement today, LA Weight Loss has agreed to pay $275,000 to consumers across New York state. Consumers who believe they are entitled to a refund should contact the Attorney General’s Office at 800-771-7755 and ask for a LA Weight Loss claim form. Completed claim forms must be filed with the Attorney General’s Office by March 2, 2009.

Consumers are encouraged to consider the following tips when considering signing a health club contract:

  • Visit or call at least two other health clubs to learn about dues and when they must be paid, hours of operation, variety and frequency of classes and ability to use multiple locations

  • Do not give in to high pressure sales tactics or feel obligated to sign a contract immediately

  • Tell the health club representative you need time to think about joining the club and ask for free passes to determine if the club is right for you.

  • Check to see if any complaints have been filed against the health club with the Better Business Bureau or your local Department of Consumer Protection

  • Paying by credit card will offer the consumer protections and a dispute process not available through payment by cash or electronic fund transfers

  • Check to see if a health club is bonded or has filed the proper financial security to protect you against losses of pre-paid membership dues. To verify a club’s compliance with these requirements, consumers may contact the New York State Department of State’s Division of Licensing Services at (518) 474-4429.

New York State law requires that most health clubs post a performance bond to protect their members against breaches of contract. Specifically, the law requires bonds in the following denominations: $50,000 for health clubs that sell contracts for no more than 12 months; $75,000 for health clubs that sell contracts of one to two years; and $150,000 for health clubs that sell contracts of two to three years. Health clubs with multiple locations are required to post additional amounts up to $200,000. Health clubs are exempted from this requirement: (a) if they do not offer memberships worth more than $150; or (b) for health clubs that require longer term commitments, if monthly dues do not exceed $150, paid-in-full fees are not discounted by more than ten percent, memberships do not exceed one year, and the contract does not contain an automatic renewal provision.

New York State Health Club Services Law provides specific protections for consumers. The law:

  • Limits health club contracts to $3,600 per year (excluding tennis and racquet ball facilities) and to terms no longer than 36 months

  • Allows consumers to make installment payments on their contracts in equal amounts at regular monthly intervals

  • Provides consumers with a three-day right to cancel the contract after signing

  • Provides the right to cancel a contract at any time for any of the following reasons: if the health club ceases to offer the services stated in the contract; if the consumer moves 25 miles from any health club operated by the seller; 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

  • Requires health clubs to provide refunds within 15 days of cancellation

  • Provides aggrieved consumers the right to sue in small claims court and receive an amount of not more than three times the actual damages plus reasonable attorneys’ fees

If area consumers believe they are being defrauded by a health club or gym, they are encouraged to contact Attorney General Cuomo’s Office at 800-771-7755 or visit www.ag.ny.gov.

The LA Weight Loss case was handled by Principal Attorney Robert Vawter in the Attorney General’s Consumer Frauds and Protection Bureau under Deputy Bureau Chief Mark Fleischer.

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