Business Practices Committee Report 70

A "harmful business practice" in terms of the former Act is any business practice which, directly or indirectly, has or is likely to have the effect of harming the relations between businesses and consumers, unreasonably prejudicing any consumer or deceiving any consumer. The Act does not distinguish between harmful business practices that come about by accident or those that come about by design. It is clear from the complaints received that consumers were, directly or indirectly, unreasonably prejudiced and/or deceived by the business practices of fitness centres. This is not in the public interest and the prejudice and/or deception could most probably be reduced should a restriction be placed on the duration of memberships and allowance be made for a cooling-off period. Possible solutions considered were to prohibit fitness centres from offering membership agreements for periods exceeding one year, should the centre have an existing lease agreement on the premises, that exceeds one year. A further possible solution considered was to impose a cooling-off period in the industry.

It is impossible to end fitness centre closures, but it is possible to reduce losses to consumers if such event should occur. The Committee also considered a code of practice for the industry, but unfortunately a representative self-regulatory body within the industry to administer such a code does not exist. A system of licencing or the introduction of elaborate requirements about the operation of trust accounts may enhance consumer protection. The Committee, however, does not consider such controls to be cost-effective. A practical approach seems to be to place a restriction on the duration of memberships.

Concerns have been raised by consumers and some fitness industry service providers about the marketing activities prevailing within the industry. There appears to be a need to ensure that consumers are protected from inappropriate marketing activities and in particular high pressure sales techniques at the point of sale by the consultants. In this case a practical solution would seem to be to introduce a cooling-off period.

It is considered that the adoption of the proposed prohibition by the Minister will reduce consumer detriment and improve service delivery in the interests of consumers and the industry.