Posted Nov 28, 2007, 12:12 PM
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Premier Fitness
Fitness chain to pay $200k for false advertising
November 28, 2007
Steve Arnold
The Hamilton Spectator
(Nov 28, 2007)
One of Ontario's largest fitness chains has been hit with a $200,000 penalty for false advertising.
Premier Fitness Clubs, which has seven outlets in the Hamilton-Burlington area as well as 28 others, will pay the penalty to settle charges levelled by the federal Competition Bureau.
Bureau spokesperson Pamela Wong explained charges were filed against the company after more than two dozen Ontario residents complained they were hit with heavy fees after responding to an offer of a "free" membership for 30 to 90 days.
In order to get that free pass, however, consumers were told they'd have to pay for a mandatory fitness assessment and sign a contract to buy a year-long membership.
"There were a lot of hidden fees to get that 30-day free trial, so it wasn't exactly free," Wong said. "When we see a significant consumer issue like that, we will act on it."
Lawyer Joseph Markson said the settlement "resulted from Premier's full co-operation to address the bureau's concerns," adding that since 2004 Premier "has changed advertising companies and has achieved exemplary compliance" with federal regulations.
In a news release, the bureau said Premier's false claims were distributed on the radio, billboards, in storefront signs, in newspapers and flyers between 1999 and 2004.
"The bureau is committed to ensuring that consumers are not enticed to make purchases based on misleading information," said Andrea Rosen, acting deputy commissioner of competition in a news release.
"Truth in advertising is fundamental so that Canadians do not sign contracts or make purchases only to find that additional costs have not been disclosed."
The bureau added Premier "has voluntarily taken steps to correct its advertising practices in order to conform with the law."
"This co-operation, along with the consent agreement, have resolved the Bureau's concerns without having to proceed with costly litigation."
Getting a settlement without going to court was a bonus for the Bureau, Wong said, because the maximum penalty after litigation would be only $100,000.
"This is a pretty good penalty for this kind of case," she said. "It's much faster when you can settle it this way."
In addition to the financial penalty, Premier must:
* publish notices in the Toronto Star, Toronto Sun and Ottawa Citizen;
* display a notice in its clubs and on its website;
* implement a new corporate compliance policy to cover its marketing practices; and
* not make false or misleading representations in the future.
Wong explained Premier has five days, starting yesterday, to post the notice on its website. The newspaper notices must start within 30 days and appear on four consecutive Wednesdays.
"This was an amicable resolution of concerns raised by the Bureau," said Markson, the company lawyer. "Premier took a high road approach here to the issues raised by the Bureau. A stricter approach to advertising than Premier's would be hard to find now. Transparency is the goal and Premier has worked hard to address these historical concerns."
Yesterday's penalty is the second time Premier has been punished by the Competition Bureau and the third time this year it has been penalized by government agencies. The company was fined twice in April by provincial authorities for failing to pay employees and for violations of the Occupational Health and Safety Act.
In total, the company has paid out $280,000 this year. In 1997, Premier was also fined for misleading advertising in a "scratch-and-win" promotion.
The Spectator's 2004 investigation of Premier's business practices was partly responsible for getting the Ontario government to tighten its consumer protection legislation to ban negative option billing -- the practice of automatically renewing a contract or charging for a service unless the consumer specifically asks to cancel. It was the first overhaul of consumer law in Ontario for 30 years.
Consumers can now also refuse to pay for goods or services not delivered 30 days after they were promised. And the cooling-off period for cancelling such things as gym memberships, vacation clubs and time shares has been doubled to 10 days
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I know this doesn't directly affect Hamilton, but goes to show how evil this company is and how they are/were obviously lying about building that condo @ York/Hess.
There is also some good tips from the article.
How are these businesses allowed to stay open??
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