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Tuesday, September 6, 1994 - Page updated at 12:00 AM

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Consumer Complaints Over Gyms Are Rising -- State Adds Staff To Investigate Health Clubs

Complaints about health clubs in Washington state are rising at the same time the industry is undergoing a shake-out, with some facilities closing and others changing hands.

Late last week, one of Seattle's largest health clubs closed its doors for two days during a change of name and ownership.

The change came only three weeks after the state hired a new assistant attorney general, Regina Cullen, to study health-club complaints, which are up about 34 percent so far this year.

Most of the complaints aren't about fitness or exercise, but about sales, billing and collection practices that often leave health-club members without facilities - and in some cases without refunds - that they say they were promised.

The attorney general's office said it received 408 complaints about health clubs from January through August, a rate that would produce about 612 complaints for the full year. That would be 34 percent above the 457 complaints received through all of last year. Complaints totaled 465 in 1992.

"There are a lot of people who are unhappy out there," said Cullen.

Of the complaints this year, 31 were aimed at American Health & Fitness Centers Inc., which until last week owned the two-story club in the Washington State Convention and Trade Center in downtown Seattle.

That club was closed Thursday and opened Saturday under new ownership as Cascade Athletic Club.

An American club in Redmond also changed ownership last week but will keep its name for the time being, said John Michael, who bought both clubs' assets. American Health & Fitness still owns a club on Westlake Avenue North. An employee there said that club probably will be renamed.

Owners of American Health & Fitness were unavailable for comment.

The former American club in the convention center is now owned by Evergreen Health & Fitness and opened over the weekend as Cascade Athletic Club. It is affiliated with 11 other Cascade clubs in the Seattle area, Michael said.

American's members complained to the attorney general that sales representatives promised things that were never in the contracts they signed, and pressured them to sign contracts without reading them. Those who attempted to cancel their memberships and obtain refunds said their phone calls weren't taken or returned, and their letters were supposedly lost. Some said they were told the company had no money to make refunds.

Michael said the convention center club had more than 10,000 members. He said many of American's problems stemmed from its use of one-year contracts that couldn't be canceled.

Michael said his clubs operate with only month-to-month contracts, giving members the right to cancel anytime on 30 days' notice. He said the convention center club will operate that way.

Complaints about Washington health clubs filed with the state attorney general's office this year indicate several patterns:

-- Bare-bones facilities are opened, and better ones are promised to members who sign up at "pre-opening" special prices. But sometimes the new facilities are not completed on time, or ever. Members requesting refunds are told they must use an affiliated club at another location.

-- High-pressure sales tactics are used to persuade consumers to sign contracts on the spot without reading them. The contracts are often quite different from what the salespeople describe.

-- Health-club members authorize monthly payments to be withdrawn automatically from their checking accounts, only to find that higher amounts - and sometimes double withdrawals - are taken.

-- Members who cancel their memberships and revoke authorization for automatic bank or credit-card withdrawals are dunned for late payments. Sometimes their accounts are turned over to collection agencies that hound members at work, threatening lawsuits and ruined credit records.

-- Clubs refuse to take or return phone calls from members seeking refunds.

The attorney general's office has filed 13 lawsuits against health clubs since 1988, Cullen said.

Last winter, the agency filed suit against Bally's Pacwest Inc. of Federal Way, the object of 652 complaints - about one of every four filed in the state - since January 1990.

The suit charged Bally's with using high-pressure bait-and-switch sales tactics, making insulting remarks about prospects' physical appearance, blocking doors so they could not leave a room without signing a contract, misrepresenting what was in the contracts and refusing to honor requests for cancellation until members were paid up and "in good standing," in violation of state law.

Bally's seven Puget Sound-area clubs also overbilled customers and used harassment to try to collect bills, the suit charged.

Bally's, which operates seven health clubs in the Puget Sound area, settled the charges last February, agreeing to resolve the complaints through arbitration.

In another case that went to mediation in March, the state charged LivingWell Inc., owner of Livingwell Lady clubs, with deceptive television advertising and sales tactics.

Although LivingWell promises members will get classes and instructions, "instructors habitually fail to show up for classes" and when that happens, club managers either cancel the classes or "substitute an unqualified instructor or a club member to teach the class," the lawsuit says.

State law requires contracts for health clubs to spell out consumers' rights, including the right to refunds and how to obtain them. But the lawsuit says LivingWell tries to keep prospects from discovering those rights "by folding the contracts into a rectangle immediately after the agreements are signed, stapling the contract closed and instructing consumers to use these agreements as temporary membership cards."

Cullen said her agency is still negotiating a settlement with LivingWell.

Cascade Athletic Club, which took over the convention center facility, was the object of 30 complaints through Aug. 29, in addition to 108 in 1990 through 1993.

Many of the complaints concerned difficulties and delays obtaining promised refunds. One member said Cascade sent him dunning notices for past-due amounts even though the member had canceled checks to prove he had paid. Some members said Cascade continued to withdraw money from their checking accounts even after that authorization had been rescinded.

"If you sell something, you will always have complaints," Michael said. "You can't get around that. We have over 100,000 members in our clubs and we make mistakes. When we find out about them, we correct them."

One former American member, Laurie Dombrowski of Issaquah, said she has been waiting for a requested refund since May. She signed up for a pre-opening membership in April at a soon-to-be-opened American Health & Fitness club at Fourth Avenue and Stewart Street.

Dombrowski thought she was getting a good deal in return for temporarily putting up with what American's staffers acknowledged were "really poor facilities" that didn't include air conditioning, locker rooms, showers or places to leave clothing during exercises.

She said club personnel showed her "a huge back room filled with exercise equipment, but we couldn't use it."

For about three weeks, Dombrowski and other new members engaged in limited workouts at the club, even though the only place for women to change their clothes was a tiny room without a door, separated from the main exercise room by a curtain.

When it became clear that American did not intend to complete the facility (it closed in May), she asked for her money back. When she got the runaround, she filed a complaint with the attorney general's office.

In her complaint, she said one fellow member "has been walking down to the convention center location almost every Monday for the past two months in a hope that face-to-face encounters would produce his refund." Dombrowski said the man finally went to the club and announced he simply wasn't leaving without a refund. He got it.

Cullen said the state's health-club law may need revisions, though it is too early for her to say what they might be.

"The problem with legislation is that you can't anticipate every problem that will arise. We are trying to get a better handle on what is going on in the industry," she said.

Copyright (c) 1994 Seattle Times Company, All Rights Reserved.

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