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Feeling short-winded about business closures?

Take steps to protect yourself, experts say

POSTED: March 12, 2008 5:00 a.m.
Tom Reed/The Times

Uptown Fitness in downtown Gainesville is an example of a business that closed unexpectedly, leaving customers with worthless gift cards and memberships. State officials advise engaging in a month-to-month contract instead of any long-term commitment to protect yourself and your finances.

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In your quest for fitness, you wake up early, put on your exercise wear and head off to your local gym.

However, upon arriving you find the doors locked and the business abandoned.

It doesn’t happen as often, thanks to a state law which regulates contracts for health clubs and spas, but if you have signed up for a long-term agreement, a state spokesman says beware.

"It was a lot worse before they passed the health spa legislation years ago," said Bill Cloud, a spokesman for the Governor’s Office of Consumer Affairs. "The best thing someone can do is only go to health spas that will let you pay by the month. That way, the money you would lose would be one month’s fee."

But some health clubs offer "packages" by which you pay for an extended membership and are provided a bonus time, such as pay for two years in advance and the third year is free.

"There are all kinds of offers and they’re not illegal," Cloud said. "People believe they can buy a lifetime membership to a health spa. That’s not for their lifetime, it’s for the life of the business. If that health spa closes and you have a lifetime membership, you now have a lifetime membership to a warehouse."

Any contract offered by the health club or spa must be approved by the Office of Consumer Affairs. State law limits the term of a contract for 36 months.

However, the state recommends a month-to-month arrangement, which may come at a higher cost. They also suggest that any automatic payment be made from a credit card, rather than a checking account, because of the ability to dispute a payment with credit card companies.

The unexpected closing of a health club is symptomatic of consumer frustration with any business that closes.

While some businesses, including health clubs, have to show their financial standing at opening, there is no guarantee that they will remain in business.

A common way to determine if a business or service company has had complaints lodged against it is through the Better Business Bureau. State officials also suggest asking your friends, neighbors or co-workers about the reputation of a business.

State law gives consumers seven days to reconsider their signature on a contract. During that time, you can work out at the club and determine if the facility and cleanliness meet your desires. The law states that you do not have to give any reason for withdrawing a contract during the seven day period.

What if the business closes and you have paid an extended contract in advance? Your only source of recourse may be filing suit against the company in magistrate court.

If the business has filed for bankruptcy protection, you would have to file a claim in U.S. Bankruptcy Court, however, you will be in line with other creditors including banks, landlords and utilities.

If your health spa membership contract is serviced by a finance company and the spa closes, immediately notify the finance company in writing so that you are not obligated to continue making payments.

If you authorized the spa to withdraw your monthly payments from your bank account automatically and the spa closes, immediately notify the bank in writing to cease making deductions.

The Consumer Affairs Office also advises to be aware of spas that charge graduated fees, such as $800 for the first year, $400 for the second year and $50 for the third. They know from experience that the majority of members lose interest before the end of the contract.



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