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Are gyms facing avalanche of class action lawsuits?

So, here we are in 2011 – Happy New Year! Or, as some elements of the media and public would like to have it, Litigious New Year!

As of 1 January the new Australian Consumer Law kicked in, opening the doors to potential legal action against fitness facilities which are perceived to be implementing unfair fees or conditions.

Appearing to bear some grudge against fitness centres – as the tabloid media frequently does – a journalist in Sydney’s Sunday Telegraph could barely disguise his glee at the prospect of members grouping together to sue their gyms, writing; ‘Consumers can look forward to a wave of class actions against fitness firms and gyms …as lawyers take advantage of the new Australian Consumer Law’.

The nature of the law means that companies have to be taken to court and prosecuted to come into effect – a course of action which is too costly for most individuals to consider taking. This is where class actions come in, allowing groups of people to prosecute together and split legal costs.

 

James Higgins, a lawyer from plaintiff law firm Slater & Gordon, is reported as saying ‘Exit fees or penalties are very common, not just in banking, but across all sorts of industries, from fitness to electricity companies’.

 

Although the article noted that the law applies to all areas of business, it’s author focused his ire on the fitness industry, writing ‘Gym membership is an oft-quoted area where big fitness firms in Australia levy a range of outrageous fees and conditions that make it almost impossible for consumers to escape with a fair deal’.

 

So – will the change in law affect the nature of your gym’s membership agreements? Will it benefit the industry by changing for the better the practises of a minority of unscrupulous operators, or will it lead to a growth in ‘no-contract’ agreements, potentially making it harder for fitness businesses to manage cashflow and plan budgets? And is Australia in danger of going down the route of sue-happy America?

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Posted by: Ariel Gonzalez-Motivate You Fitness & Personal Training. www.motivateyou.com.au | 12-Jan-2011 05:23 PM | 4 out of 5 stars

I think Australia is generally heading down the American "sue-happy" track in all industries, not just the fitness industry. Can the industry take more negative perception or publicity?

One would hope that the law will benefit the industry as a whole---, consumers and fitness business owners. As it currently stands perception is reality. People feel they are being ripped off if they want to cancel their membership. Our business is benefitting from this as they leave the gym environment to train in our bootcamp sessions in Liverpool, Campbelltown and Fairfield.

Only time will tell if the Standards will rise, or if it will become a "free for all". Being an optimist, i think standards will rise