A class-action lawsuit was filed this month against 24 Hour Fitness, claiming the company has raised renewal rates for lifetime memberships.
Kevin O’Shea of California, Mark Vitcov of Oregon and Rod Morris of Texas filed the lawsuit on April 1 in the U.S. District Court for the Northern District of California in San Francisco. The three 24 Hour Fitness members also allege that the San Ramon, Calif.-based company’s sales representatives have used aggressive sales pitches to fraudulently induce consumers into purchasing lifetime memberships.
Upon purchasing a lifetime membership at 24 Hour Fitness, according to the complaint, members prepaid three years worth of membership fees and only had to pay nominal annual renewal fees every year afterward. These renewal fees were supposed to remain constant, members believed.
However, the plaintiffs claim in the complaint that under new 24 Hour Fitness ownership, “24 Hour Fitness decided to stop honoring the supposed Lifetime Fee Guarantees it had been promising to its members and began alerting its lifetime members—some of whom had paid the same Annual Renewal Fee for more than two decades—that their Annual Renewal Fees would increase in 2016 (in most cases, to either double or triple their previous rates).”
The complaint states that after April 2006, the membership agreements 24 Hour Fitness had lifetime members sign did not guarantee that their memberships would be lifelong and that 24 Hour Fitness could increase all subsequent annual renewal amounts on prepaid memberships. The plaintiffs claim, however, that 24 Hour Fitness continued to advertise lifetime memberships in its clubs and that the company trained its sales representatives to push lifetime memberships on prospects.
According to the complaint, O’Shea paid $700 for a lifetime membership to 24 Hour Fitness on Jan. 28, 2008. His annual renewal rate was $49 until this past January, when it was raised to $124. Vitcov paid $545 for a lifetime membership to 24 Hour Fitness on Feb. 25, 2007, with an annual renewal rate of $69 that was recently increased to $119. Morris paid $700 for a lifetime membership to 24 Hour Fitness on Dec. 16, 2006, with a locked-in annual renewal rate of $49 that was increased to $161.29 in January.
In the complaint, the plaintiffs allege fraud; violation of California’s Consumer Legal Remedies Act, Unfair Competition Law, and Health Studio Services Contract Law; violation of Oregon’s Unlawful Trade Practices Act; and violation of Texas’s Health Spa Act and Deceptive Trade Practices Act.
A spokesperson for 24 Hour Fitness has not immediately responded to a request seeking comment, although the company typically does not comment on pending litigation.
In May 2014, private equity firm Forstmann Little and Co. sold 24 Hour Fitness for $1.85 billion to an investment group led by New York-based private equity firm AEA Investors and the Ontario Teachers’ Pension Plan, Toronto. Fitness Capital Partners, a fund organized by Dean Bradley Osborne and Global Leisure Partners, also was part of the acquisition group.