Gyms get hard word from ComCom on unfair members' contracts

Gyms will have to get their contracts in shape after a review by the Commerce Commission. Photo / 123RF

The Commerce Commission has flexed its power and told gyms to get their contracts in better shape.

A comprehensive review of gym contracts found unfair provisions that penalised consumers while maximising gains for the clubs. The gyms in question have responded well to the review and have already started toning the language in the contracts, the Commerce Commission said.

The gym contracts were found to have challenging cancellation processes, murky language around injury and stolen goods liability, and unfair provisions which allowed gyms to raise prices in the duration of a fixed contract.

"Our review identified a number of potentially unfair terms across the contracts. These included onerous liability provisions where gyms tried to exclude all liabilities to customers for damage or loss to members' property, as well as provisions allowing the gym to unilaterally vary their location and services. A number of the contracts were also not written in plain English and contained complicated and onerous cancellation processes and notice provisions," said commissioner Anna Rawlings.

"We're satisfied with the response from gyms to our concerns, with all providers demonstrating a desire to comply with the law, either justifying how the terms are necessary to protect their legitimate business interests or agreeing to amend their contracts. For some it prompted a complete rewrite of their contracts."

Some examples of unfair cancellation processes included forms having to be submitted in writing, with sign-offs from gym managers within a strict timeframe. Failure to follow the procedure meant the gym could nullify the cancellation and continue charging the customer.

Rawlings said the commission was "particularly pleased" to see gyms amending their termination clauses and associated fees.

"This includes some gyms reducing their 30 day notice periods for cancellations outside any minimum term down to between 7 and 14 days. Some gyms also amended provisions relating to their liability to members, and variation clauses about their location and the services they offer," she said.

The commission has sent advice letters to all the gyms involved and advised other gyms to review the findings and lift their game.

The gym report is the third review into unfair contracts following telecommunications companies and the energy retail sector.