Consumer Publications List

Long-Term Contracts: Health Club Memberships, Lawn Care, and More

"We offer tremendous savings if you sign a three-year contract."
"If you buy a two-year membership at our health club, you'll be eligible for a discount."

These types of sales pitches often encourage consumers to sign long-term contracts for health club or vacation club memberships, dance or martial arts lessons, lawn care, pest control, or dating services. However, many consumers who sign long-term contracts are unhappy later because the service was unsatisfactory, they really couldn't use the service, or the business closed its doors.

Unless you're thoroughly familiar with the service being sold and the business selling it, it's always best to sign a short-term contract. Then, if you like the service and the company, you can sign a long-term contract.

The Service May Be Unsatisfactory
A Baltimore woman paid $2,700 for a year's membership in a video dating service. After a few months she still hadn't had a date. She asked to cancel the membership and get a partial refund, but the company refused. It said that it never guaranteed members would get dates, that it only provided a service through which people could view other members' videos and make contact if they chose.

Try to find out as much as possible about the service and the company before signing any contract. Check the company's complaint record with the Consumer Protection Division. If possible, ask the business for names of some customers–and call them.

What exactly does the contract obligate the company to do for you? Ask about any additional expenses you may be required to pay. For example, if your pest control company requires the removal of woodwork in order to treat infested areas, who pays for the carpentry work? If you join a travel club, will your vacation packages include things like airfare, hotel, meals, processing fees, and taxes, or are they extra?

Find out what the company will do if the service doesn't do what it's supposed to. Does the company offer a warranty, and if so, exactly what does that provide?

You Might Not Use the Service
A Prince George's County mother contracted with a karate school for classes for her 4-year-old. The agreement obligated her to pay $943 over three years. When he lost interest after a few lessons, his mother tried unsuccessfully to cancel the contract.

Despite the best intentions, many consumers find they don't use the services provided under a long-term contract. Many consumers have joined a health club, only to find they really don't want to work out regularly. It's frustrating to have to continue making payments for a service you're not using. Don't assume you'll use it unless you have used the particular service in the past.

In addition, your financial circumstances could change. If you lost your job, or added a new baby to the family, it might be difficult to continue paying for a health club membership or lawn care service, for example.

The Business May Close
If a contract requires you to pay a membership fee, dues or other fees in advance, you could lose that money if the business shut down.

To protect yourself, arrange to pay dues or other fees monthly or quarterly if possible, so you won't lose a whole year's dues if the business closes. Also, if you're considering signing a long-term contract with a health club, weight loss center or martial arts school, check to see whether the business is registered and bonded. All health clubs, weight loss centers and martial arts schools in Maryland are required to register annually, and those that require you to pay significant fees in advance are required to be bonded, which may allow you to recover your money if the facility closes. Call the Maryland Health Club Unit at (410) 576-6350.

Beware of Misleading Statements about Cancellation Rights
Before signing a five-year contract with an Annapolis health club, a woman was assured that she could cancel her membership if she moved out of the area. Two years later, she did move, but the club refused to let her out of the contract. It turned out that there were some affiliated health clubs near her new home, and the contract stipulated that she could not cancel in that case. She wasn't happy because the other clubs were not convenient to her new home.

Some businesses may try to convince you to sign a long-term contract because they say you can cancel if you change your mind or move out of the area. Be careful. Read the contract to see if there is a right to cancel and if there are any limitations put on it.

There is no universal right to a "cooling-off" period after you sign a contract. In Maryland, only a few types of transactions are required to allow you to cancel within a few days: you have the right to cancel a contract for a health club, self-defense school or weight loss center within three days after you sign, and the right to cancel a contract for a timeshare, vacation or campground membership within 10 days after you sign. You do not have a right to cancel other types of future service contracts unless it is clearly stated in the written contract.

Watch Out for Automatic Renewals
Some contracts will automatically renew at the end of the initial period, unless you tell the company within a certain period of time that you do not wish to renew. If you are not sure you will want to renew, make a note on your calendar of when you must notify the company. Otherwise, you could be obligated for another term.

Always think twice before signing a long-term contract for future services. Only do so if you have checked out the company and are sure you will want the service for the length of the contract.

July/August 2003

Maryland Attorney General's Consumer Protection Division Consumer hotline: (410) 528-8662 or 1 (888) 743-0023 toll-free