Spitzer Secures Thousands In Refunds For Westchester Fitness Club Members

State Attorney General Spitzer today announced a settlement with Dolphin Fitness club in Sleepy Hollow that requires the club to offer immediate refunds to consumers who pre-paid for membership in the club, which has yet to open. Since late 2000, Dolphin Fitness "pre-sold" approximately 300 memberships while promising consumers that the club would open in the spring of 2001. The club failed to open and club management now promises the club will open in September.

Under the Attorney General's settlement, consumers who signed up with Dolphin Fitness in Sleepy Hollow will be offered the choice of an immediate refund of their $279 - $329 membership fee, or an additional three-month free membership (on top of their pre-paid 12-month membership) if they choose to wait until the club opens. If all eligible consumers elect to get their money back, Dolphin Fitness will pay a total of over $90,000 in refunds. The club will also pay $20,000 to the state in civil penalties and costs.

"Health club consumers are entitled to get what they paid for," Spitzer said. "These consumers were left in a state of limbo, unable to work out at the club yet unable to get their money back. We will not permit a club to pre-sell memberships and then hold onto the money if the club does not open within a reasonable period of time."

Dolphin Fitness violated state law by failing to place customers' funds into an escrow account. Under New York's Health Club Services Law, all monies received by a health club from members prior to the full operation of the club must be deposited in an escrow account. The law is intended to protect club members in the event the club is not open and substantially completed within one year.

In addition, the law provides that every contract for services at a planned health club or club under construction is voidable at the consumer's option if the services to be provided are not available within one year from the date of the contract. Dolphin Fitness failed to issue refunds in accordance with the law, despite repeated requests from consumers.

In addition, at least 33 consumers who were denied refunds brought actions against Dolphin Fitness in Small Claims Court and obtained judgments against the club. The club still refused to pay, in violation of state law which requires that any small claims judgments which relating to business activities must be paid. The settlement requires that these judgments will be paid immediately.

The Attorney General's investigation also revealed that 15 out of 16 other Dolphin Fitness clubs in New York operated by Andrew Carino, the proprietor of the Dolphin Fitness club in Sleepy Hollow, failed to comply with additional requirement under the Health Club Services Law to post a bond, letter of credit or certificate of deposit so that refunds are available for consumers who have paid advance fees in the event the club goes out of business. Carino has now posted a $350,000 bond to cover all of the clubs, as required by law.

The investigation also revealed that all 17 Dolphin Fitness clubs operated by Carino were in violation of other provisions of the Health Club Services Law, including the requirement that health club contracts advise consumers of the statutory right to cancel their membership within three days of joining. Pursuant to the settlement, these clubs are required to revise their membership contracts and otherwise comply with the law.

Individuals who wish to file a complaint against a health club are encouraged to contact the Attorney General's consumer help line at (800)771-7755 or visit his web site at www.ag.ny.gov.

The case was handled by Assistant Attorney General Doris Morin of the Westchester Regional Office under the supervision of Assistant Attorney General-in-Charge Gary Brown.

In addition to enforcement efforts, Spitzer's office has issued tips for consumers who are considering whether to join a health club: