How to safeguard your rights during fitness center closures
Last Friday, a major gym chain in Hong Kong, PHYSICAL Fitness & Beauty, announced its sudden temporary closure. By this morning (Sept. 9), the Consumer Council received 605 complaints involving nearly HK$19 million, with the highest single claim at HK$650,000.
Many gyms operate on a prepaid model, raising concerns about consumer rights when closures occur. Here's how consumers can protect themselves and seek redress:
Steps for Consumers
Check Remaining Balances: Confirm unused services and retrieve personal items from lockers.
Refund Process:
- If you paid in full with a credit card, contact your issuer with receipts and contracts to claim unused services.
- For installment payments, you may still need to fulfill your credit agreement despite the closure.
Document Preservation: Keep all contracts and receipts for potential disputes.
Compensation Possibility
In liquidation, assets prioritize secured creditors. Consumers, as unsecured creditors, might receive compensation only after other claims are settled.
Therefore, after the closure and liquidation of the fitness center, there is a chance that you may not be able to get back or enjoy the products or services you have purchased, or even receive compensation or refund of the prepaid amount and deposit from the fitness center.
Transition to Another Gym
Check before accepting any transition offer:
- Whether there are any additional charges involved in the transitional scheme.
- How to calculate the prepaid amount and unused services.
- Requirement of documents and terms and conditions to be signed in advance for the transition.
- Consequences of not accepting the transitional arrangement, e.g. how to compensate according to the terms of the contract, or refund the prepaid amount and deposit.
- Consent to the transfer of personal data to another fitness center.
Consumer Council's Role
If a fitness center closes down and becomes unreachable, the usual mediation by the Consumer Council may not be effective. Upon liquidation, whether voluntary or forced, a provisional liquidator is usually appointed and announced formally.
Consumers should monitor these official announcements from the fitness center. Following the instructions provided, they can contact the provisional liquidator. This allows them to take necessary steps, like registering as creditors, to protect their interests.
Legal Concerns
If the gym continued aggressive marketing knowing it would close, it might breach the Trade Descriptions Ordinance. Report suspicions to the Customs and Excise Department or seek assistance from the Consumer Council.
Misleading Promotions
According to the Trade Descriptions Ordinance, it is illegal for any business to accept payment without intending to supply the product, intending to supply a significantly different product, or without a reasonable belief that they can supply the product within a specified or reasonable period.
Consumers suspecting violations can report to the Hong Kong Customs and Excise Department. The Consumer Council can also refer cases to Customs for follow-up.
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Closure of PHYSICAL Fitness & Beauty leaves customer stuck with unrecoverable 10-year contracts
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