Weighty issue of gym contracts
I do get a steady stream of gym-related complaints, but they make up nowhere near 75% of my inbox – car and cellphone dramas account for the lion’s share.
On reading that newspaper story, published last week, a different statistic emerged: “75% of complaints to the National Consumer Commission (NCC) about gyms related to contract cancellation issues.”
Now that doesn’t surprise me.
Many are told they can’t cancel early, despite the CPA allowing them to do so, in writing, with 20 business days’ notice, for a “reasonable” cancellation fee. (See sidebar)
The other big issue is members not realising that their contracts don’t automatically end on the expiry date as the word “expiry” implies: instead they roll over to a month-to-month basis unless the member pro-actively cancels, in writing, giving a month’s notice.
Yes, the written cancellation requirement is in the small print of all gym contracts, but sadly overlooked by most.
That’s why the CPA compels gyms and the like to contact contract holders 40 to 80 business days before the contract’s expiry date, and notify them “in writing or any recordable form” of the imminent expiry of their contract, warning them that it will automatically continue unless they either tell the company to terminate the agreement, or renew it for another fixed term.
The legislators’ intention was to put an end to companies keeping quiet and profiting from consumers’ assumption that their contract lapsed on the expiry date.
And the words “in writing or any recordable form” are significant, because in the event of a dispute, evidence is required.
I recently reported on a case of a gym owner claiming the CPA notification was made to a member by phone, but that the system had since crashed so there was no recording.
The member hadn’t realised that her membership, and the debit order, were still active many months after she thought the contract had expired.
Commenting on that case at the time, ombudsman for consumer goods and services, Advocate Neville Melville said: “It might ordinarily be enough to say ‘this is the business practice and it is followed without fail’, but here the CPA refers to ‘recordable’, and this raises the bar.”
To my mind, it follows that if a company can’t prove that it notified a customer of their options 40 to 80 days before their contract’s “expiry date”, they have no right to continue to debit their bank account after that expiry date.
I was more than a little surprised to discover that the NCC felt differently.
Spokesman Trevor Hattingh put it like this: “As much as the act requires the supplier to notify the consumer in a recordable form of the impending expiry of a contract, it also requires from the consumer to actually cancel a contract upon its expiry or at any other time. There is thus a shared responsibility in this regard.
“What is very clear in the act is that the one party’s obligation is not dependent on that of the other.”
Okay, so bearing in mind that gyms, and other companies offering fixed term contracts, would really prefer their customers not to cancel their contracts, there appears to be nothing to stop them from simply claiming that they notified a customer that their contract would roll over to month-to-month if they didn’t cancel. Failure to provide proof that that notification was indeed delivered, doesn’t let the consumer off the hook, according to the NCC.
I wonder then, does it follow that a consumer can simply claim they did cancel, without providing any proof?
Given that the consumer goods and services ombudsman is obliged to “offer guidance to participants in the industry as to the implementation of and the compliance with the CPA” and to educate the public of their rights, I asked Melville for his view.
“A fixed term agreement expires at the end of the term unless the supplier gave the proper notification in terms of Section 14(2)(c) of the CPA,” he said.
“If that is done, the contract will roll over on a month-to-month basis unless the consumer cancelled it. If there is no such notification, the contract is ended and there is no obligation to cancel or further obligation to pay.”
And the ombudsman’s office, happily for consumers, does require evidence in determining cases.
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