24 Hour Fitness, San Ramon, California, has agreed to a $1.5 million settlement with 255,000 of its members who alleged the health club company made false promises about membership rates for more than a decade.
In 2006, 24 Hour Fitness adopted a new annual rate-increase policy in its membership contract, but some employees allegedly promised members that their rates would remained fixed, according to the Nov. 1 settlement filed with the U.S. District Court for the Northern District of California. Some members said that they felt misled when their rates began to increase in 2015. An initial complaint was filed in July 2016 over the allegedly broken verbal agreements.
Notices will be distributed to current and former members who have six months to file a declaration for restitution, according to court documents. Additionally, any former members have the option to reinstate their memberships at a decreased rate. Current members will also receive a three-year membership cap and a 10 percent refund on any fees that were pre-paid at higher rates.
24 Hour Fitness has not yet responded to a request for comment.
The proposed settlement states: “Broadly speaking, plaintiffs allege that 24 Hour Fitness carried out a fraudulent and misleading sales campaign related to prepaid memberships, by orally promising consumers a fixed annual renewal amount, and then years later raising amounts. Defendant denies that it engaged in any wrongdoing and contends that it was forthright about its membership terms, which were written in each membership agreement."
It continues: "The Settlement is the product of a great deal of hard and creative work put forth by the parties and it is an incredibly strong result for the class."
Dodie Katague, Contra Costa County deputy district attorney, said in a Nov. 2 San Francisco Chronicle report that he is pleased with the settlement. (The district attorney's offices of Contra Costa County and Orange County worked together in investigating the case.)
“This took a year and a half of investigation, of talking to former employees and trying to determine their practices, and of talking to the victims," Katague told the Chronicle. "So this was a lot of hard work that paid off."
24 Hour Fitness ranked No. 3 on Club Industry's Top 100 Health Clubs of 2017 list, with an estimated $1.42 billion in 2016 revenue.
In May 2017, the company appointed Chris Roussos as its new CEO.