Defunct Health Club To Refund $50,000 In Membership Dues
- Attorney General Spitzer today announced a settlement with a Manhattan health club to provide refunds to its members after the club abruptly closed down.
World Gym of Lincoln Center, Inc. closed its doors to its members on August 31, 2001. In the weeks preceding the closing, however, World Gym had been renewing memberships and selling pre-paid private training sessions.
"Consumers should be able to focus on their own fitness and not the financial health of the facilities in which they are choosing to train," Spitzer said.
Approximately 1,500 members of World Gym were left with unexpired memberships and unused training sessions and had little recourse because the health club had violated a state consumer protection law that requires it to post a performance bond to provide refunds in the event of a closing.
Initially, World Gym offered two options to its members: a refund of the outstanding pre-paid membership; or a transfer to one of three other health clubs in Manhattan or Queens. Although many consumers elected to transfer their memberships, some chose to receive refunds.
After waiting for months for their requested refunds, members received a letter from World Gym notifying them that the offer to transfer their membership fulfilled its obligation and that no refunds would be provided.
The Attorney General opened an investigation after his office and the New York City Department of Consumer Affairs began receiving complaints from World Gym members who did not receive their promised refunds.
In settling the case, World Gym and its president Anthony Schettino will pay $50,000 to fund restitution for those former members who elected not to transfer their membership and an additional $10,000 in penalties and $2,500 to cover the costs of the Attorney General's investigation.
Members of World Gym of Lincoln Center who are interested in receiving a refund need to contact Spitzer's office by mid-July 2002. To do so, individuals can call the Attorney General's consumer help line at (800) 771-7755 or (212) 416-8300.
Spitzer's office has been aggressively protecting consumers from problems with health clubs. Since 1999, three other cases of unexpected health club closings have required the intervention of the Attorney General's office to recover more than $57,000 for approximately 350 consumers in the Hudson Valley and Long Island. Last January, Spitzer's Hudson Valley office in Westchester County announced the results of an investigation of health clubs in that region and obtained settlements with 21 facilities, many of which had failed to post the required bond.
Spitzer thanked the New York City Department of Consumer Affairs for its assistance throughout the investigation.
This case was handled by Assistant Attorney General Melissa Saren of the Consumer Frauds and Protection Bureau.