Gym contracts ruled unfair
Lengthy gym membership contracts have been deemed "unfair" by a High Court ruling.
The ruling came in the case of Ashbourne Management Services, a management firm responsible for membership services and contracts at over 700 gyms across the UK.
The High Court ruled that minimum contract length terms recommended and enforced by Ashbourne, were unfair and therefore unenforceable.
The Court also ruled that the way in which Ashbourne collected arrears was unlawful.
In the four day hearing the court heard many consumers found their circumstances had changed a few months into a contract and their membership was no longer affordable but Ashbourne's contracts had minimum membership periods of between one and three years and the firm would not allow customers to terminate their membership.
When consumers stopped paying, Ashbourne reportedly demanded immediate payment of the full sum for the minimum period.
Mr Justice Kitchin ruled that Ashbourne's business model "is designed and calculated to take advantage of the naivety and inexperience of the average consumer using gym clubs at the lower end of the market," whom he considered that Ashbourne "exploited." He said that the minimum period is "a trap into which the average consumer is likely to fall."
The judge decided that it is unlawful to try to enforce or even to include unfair terms in contracts, where doing so could lead the consumer to pay money they would not otherwise have done.
Jason Freeman, director in the OFT goods and consumer group, says:
"We have received many complaints about Ashbourne's contracts, and many consumers have felt pressured into paying sums of money that they believed they did not owe. We are pleased that the Court has confirmed that these practices are unlawful, and this should bring peace of mind to many people who have fallen into the trap of signing up to these lengthy gym contracts.
"Unfair terms that unreasonably bind consumers into long contracts they cannot leave, and heavy-handed collection techniques, have no place in businesses' dealings with consumers. This ruling should help traders to understand where the boundaries lie, and sends a warning that if they cross the line, the OFT and local trading standards services can take action."
“Arrears” tend to be associated with debt. If you fall behind and miss payments on any outstanding debt, the amount you failed to pay is an arrear – the amount accrued from the date on which the first missed payment was due.