AG Gansler Reaches Settlement with Baltimore Co. Health Club, Owner
Owner of GRS Fitness, LLC Agrees to Stop Unlawful Billing Practices and Pay Restitution to Customers
MD ( Nov. 8, 2011) - Attorney General Douglas F. Gansler announced today that his Consumer Protection Division has reached a settlement with GRS Fitness, LLC and its owner, Bernard P. Caplan, Jr., resolving allegations about the discontinuation of services, false statements to consumers about their cancellation rights, charging of improper fees and attempts to collect on debts not owed.
"People join fitness clubs to get healthy and lead an active lifestyle, not to get charged for services they don't receive," said Attorney General Gansler. "This settlement is good news for consumers and puts health club owners on notice that such deceptive practices will not be tolerated."
Under the settlement, Caplan and GRS Fitness will stop billing members of Health Tek Creations, LLC. Health Tek operated a health club located at 8502 Kelso Drive in Essex, under the trade name Energy Fitness Center. It sold the business to GRS Fitness, LLC, which began to operate the facility as a Spunk Fitness franchise on or about July 7, 2010. Caplan and GRS Fitness have agreed to pay restitution to any Health Tek member who would have cancelled their membership following the change in ownership. This includes any start-up or registration fees, cancellation charges, regular dues and payment received through debt collection activity. Caplan and GRS Fitness also agreed to submit to binding arbitration of any future consumer complaint that cannot be resolved through mediation.
The settlement resolves the allegations that Caplan and GRS Fitness:
- substantially changed the fitness services at the existing facility, including the removal of plate-loaded free weights and other heavy lifting equipment, but continued to charge members the same price as before;
- told members who desired to cancel their membership due to the substantial change in services that they would only be allowed to do so if they made payment of a special fee;
- assessed improper cancellation fees to discontinue memberships and charged improper start-up fees to switch memberships to the lower-priced GRS Fitness contract;
- inappropriately subjected members who stopped paying on their Health Tek contracts to collection activity, including telephone calls and mail requesting payment from the member that was not owed due to the substantial change in services.
Caplan and GRS Fitness, LLC denied any wrongdoing, but agreed to take measures to resolve the above allegations, including direct payment to Health Tek members of improperly charged special fees and dues. Caplan and GRS Fitness, LLC also agreed to pay a penalty to the Consumer Protection Division in the amount of $50,000, which will be reduced to $10,000 if all restitution due under the agreement is paid.
Consumers with questions about the settlement may call 410-576-6350.
To see a copy of the statement of charges, go to: http://www.oag.state.md.us/Press/GRS_Statement_of_Charges.pdf.
To view a copy of the final consent order, go to: http://www.oag.state.md.us/Press/GRS_Final_Order_By_Consent.pdf.