24 Hour Fitness settles claims over rate hikes
San Ramon chain 24 Hour Fitness will pay $ 1.2 million in civil penalties, plus restitution to members, for claims that it falsely promised low annual renewal rates to members in exchange for large up- front membership fees.
The company will refund any past or present members who joined after 2006 and believed they were promised low rates. The agreement applies across the country.
The settlement, reached Tuesday, was announced Thursday by the Contra Costa district attorney’s office in conjunction with the Orange County district attorney’s office, where the in-
vestigation originated. The fitness company will also pay $ 100,000 in costs to the two counties.
“We’re very pleased with the settlement,” said Dodie Katague, deputy district attorney in Contra Costa County. “This took a year and a half of investigation, of talking to former employees and trying to determine their practices, and of talking to the victims. So this was a lot of hard work that paid off.”
The trouble appeared to start in 2006, when 24 Hour Fitness changed its membership contract to allow for annual rate increases — but sales representatives allegedly continued to promise consumers between 2006 and 2009 that their rates would remain low. In 2015, the gym began to hike rates for some members, who felt that those verbal agreements were violated.
Current and former members have six months to get their money back. Anyone who joined after 2006 will receive a notice via mail or email, and if they believe they were misled, they can submit a declaration that will be reviewed by a third party. Anyone whose membership was terminated because of failure to pay the increases can be reinstated at a lower rate, as can those who canceled their membership.
Even members whose rates haven’t yet been increased should fill out the declaration if they were promised a lifetime annual renewal, Katague said, to preserve their lower rates.
Katague said it’s difficult to put a number on how many consumers may have been deceived. He estimated that in 2015, rates of at least 100,000 members were raised, but it was unclear how many of them were promised lower rates. Nationwide, 24 Hour Fitness has about 4 million members in 18 states. The company has 140 locations in California. The issues with 24 Hour Fitness first came to local officials’ attention in 2015 when consumers began complaining to the Better Business Bureau and the district attorney in Orange County.
A Change. org petition started by Raigan Enfield in 2015 garnered 2,904 signatures. Enfield described being hit with a rate increase of $ 50 to her annual dues, after being promised a lifetime membership at a rate of $ 29.99.
“I would like to request that 24 Hour Fitness either stands by their agreement to grandfather us into a certain rate for our annual memberships or if they refuse then use the support of all of you to start a class action lawsuit against 24 Hour Fitness for this unjustified price increase,” Enfield wrote.
This is not the only time the company has settled claims of misleading business practices. In 2007, 24 Hour Fitness paid approximately $ 1.8 million over cancellation fees. In 2006 and 2010, it settled smaller claims around membership fees.
In a statement, 24 Hour Fitness said it had cooperated with the Orange County and Contra Costa County district attorney’s offices.
“The membership product in question was offered over eight years ago, and the rate increase is consistent with the contract terms,” it said. “24 Hour Fitness denies any wrongdoing. This resolution nonetheless addresses the concerns raised by some members who say that a sales representative made verbal representations inconsistent with the written contract terms.”
“We’re very pleased with the settlement. This took a year and a half. ... This was a lot of hard work that paid off.” Dodie Katague, Contra Costa County deputy district attorney