Wednesday, February 17, 2010

Bizarre Resolution to Fitness Club Saga

Last week I used a problem my wife had with fitness club payments to illustrate the downside of automatic bank account withdrawals. Ultimately, the outcome was favourable for us, but only because of a strange twist.

The saga began when my wife signed up my son to use the fitness club for 3 months, but she was made to pay by automatic bank account withdrawal. We were told that my son could cancel after three months without penalty. This turned out to be an empty promise. The contract was for a year.

When my son cancelled, he believed that the bank account withdrawals would stop. When my wife noticed they hadn’t stopped, my son went back and got another empty promise that they would stop.

After paying for an extra 4.5 months (9 twice-a-month payments), my wife stepped in. She was directed to the head office where they had no record of any promises to stop the withdrawals. As far as they were concerned, we would be paying for the full year.

The head office told us that our only option at this point would be to cancel for a $99 fee. So, what should have cost about $173 was going to cost $532. At this point we weren’t in the mood to roll over and chalk this up to experience. We were prepared to continue the battle, but it turned out not to be necessary.

The head office examined the contract and decided that my son had signed it but was too young (by only a few days). They declared the entire contract void and have returned all of our money including the initial three months!

This has worked out happily for us, apart from the aggravation, but there were some clear lessons. If my wife had signed the contract, the fitness club was prepared to stick to their guns. None of the verbal promises from the individual club meant a thing to the head office. To me, automatic bank account withdrawals aren’t worth the potential hassle.

6 comments:

  1. Legal technicalities are a wonderful thing, aren't they? Just because your son is too young, you get a windfall payback? That is Karma or "Good Fortune" at work, and to celebrate you should buy a lot of Beer and Wine and celebrate with your friends!

    The following is an unsolicited comment, all comments are not to be viewed as legal advice or in any way binding

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  2. Big Cajun Man: If there is such a thing as Karma, then I guess the next time I'm involved with a legal technicality, it will go against me. Does Karma work like hockey penalties where both teams have to have the same number of penalties by the end of the game?

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  3. It is called an "entire agreement" clause which means any side promises are null and void. In other words, trust no verbal promises especially from gyms which are infamous for these tactics.

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  4. Thicken: "Entire agreement" clauses present interesting logical problems. If I sign two separate agreements that conflict, then one must take precedence over the other, even if they both claim to be the entire agreement. In this particular case, there were two verbal agreements that took place before and after the signing of the written agreement.

    From a practical point of view, unless the verbal agreements are recorded, it seems that the written agreements will prevail. This has the effect of making it possible for salespeople to say just about anything they want to make a sale.

    I think that in cases where a salesperson deliberately makes claims that contradict the written agreement, it should be considered a form of fraud whose punishment should exceed just having to honour the verbal agreement. The punishment should go up if there is evidence that a company trained its salespeople to lie. I have no idea if any of this applies to this particular case, but it seems to be a rampant problem in North American business.

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  5. Between this and some of my brother-in-law's experiences, I'm convinced that fitness clubs are actually primarily in the business of extracting payments from people. The presence of the fitness facilities is just the bait.

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  6. @patrick, not to sound totally jaded but that is kind of the premise of business. Business needs money and basically exists to extract if from customers.

    Some businesses are better than others at actually attempting to offer services for those payments though. That is a whole different bag of worms.

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