Law Office Of Paul DePetris

WHAT IS HEALTH CLUB FRAUD?

Every fraud essentially consists of one party obtaining an unfair advantage by some act or omission that is unconscientious or a violation of good faith.  The New Jersey Consumer Fraud Act has a section that regulates the sale of health club services -- services offered by a health club for the preservation, maintenance, encouragement or development of physical fitness or physical well-being.  If a health club subject to the New Jersey Consumer Fraud Act fails to follow its requirements, the health club could face a private action for triple damages, attorney’s fees and litigation costs.

WHICH HEALTH CLUBS MUST FOLLOW THE HEALTH CLUB CONSUMER FRAUD LAWS?

The health club laws apply to any establishment which devotes or will devote 40% or more of its square footage to providing services or facilities for the preservation, maintenance, encouragement or development of physical fitness or physical well-being through physical exercise, including an establishment designated as "reducing salon," "health spa," "spa," "exercise gym," "health studio," "health club" or by other terms of a similar nature and where patron use is predominantly at will (that is, usage is permitted whenever the establishment is open or during specified time periods, such as "weekends", "weekdays", "mornings", etc.).

WHO IS EXEMPT FROM THE HEALTH CLUB CONSUMER FRAUD LAWS?

 The New Jersey Consumer Fraud Act health club laws do not apply to the following:

·         nonprofit public or private school, college or university;

·         the State or any of its political subdivisions; or

·         any bona fide nonprofit, religious, ethnic, or community organization.

·         a single focus establishment/facility that is devoted to the development of one particular physical skill, or activity or enjoyment of one specific sport.

·         basic aerobic and "dance exercise" centers operating on a scheduled lesson or hourly basis;

·         children's gyms (commercial play-spaces with trampolines and other gymnastic equipment) operating on a scheduled lesson or hourly basis;

·         martial arts schools (for example, karate institutes);

·         dancing schools (for example, ballet and jazz);

·         gymnastic schools operating on a scheduled lesson or hourly basis;

·         tanning salons ("sun studios");

·         weight control centers;

·         metabolic and nutrition centers;

·         other single sport centers (for example, swim clubs, tennis clubs and racquetball clubs).

·         health club facilities located in hotels, motels, condominiums, cooperatives, corporate offices or other business facilities and which charge fees comparable to other for-profit health clubs where usage is limited to guests, residents or employees at no charge or at nominal cost.

WHAT MUST A HEALTH CLUB DO TO COMPLY WITH THE NEW JERSEY CONSUMER FRAUD ACT HEALTH CLUB LAWS?

Each person who sells or offers for sale health club services in New Jersey shall:

• Register with the New Jersey Division of Consumer Affairs.
• Renew its registration every two years.
• Upon the sale of the health club facility or a change in the majority ownership of the stock of the corporate owner, the health club facility shall reregister with the New Jersey Division of Consumer Affairs and pay the registration fee.
•  Provide the full name and address of each business location where health club services are sold in New Jersey as well as any other information regarding the ownership and operation of each health club as required by the New Jersey Division of Consumer Affairs.

·         For each health club facility operated in New Jersey, maintain a bond issued by a surety authorized to transact business in New Jersey or maintain an irrevocable letter of credit by a bank or maintain with the New Jersey Division of Consumer Affairs securities, moneys or other security acceptable to the New Jersey Division of Consumer Affairs to fulfill the requirements of the New Jersey Consumer Fraud Act health club laws.  The bond, letter of credit or securities, moneys or other security shall be filed or deposited with the New Jersey Division of Consumer Affairs for the use of any person who, after entering into a health club services contract, is damaged or suffers any loss by reason of breach of contract or bankruptcy by the seller.   In the case of a bond, the health club shall file a copy of the bond with the New Jersey Division of Consumer Affairs and a certificate by the surety that the surety will notify the New Jersey Division of Consumer Affairs at least 10 days in advance of the date of any cancellation or material change in the bond.  The bond requirements of the New Jersey Consumer Fraud Act health club laws do not apply to a person selling or offers for sale health club services in which the buyer of the health club services purchases or becomes obligated to purchase health club services to be rendered over a period no longer than three months and in which the seller of the health club services requires or collects no more than three months' payment in advance.

·         File with the New Jersey Division of Consumer Affairs no later than January 15 of every even-numbered year, a declaration, executed under penalty of perjury, stating he sells or offers for sale only health club services under such contracts  Any person who files such a declaration and who intends to sell or offer for sale health club services under contracts with longer terms or greater payments in advance must thereafter comply with the bond requirements.

·          Complete an application and pay to the New Jersey Division of Consumer Affairs  a registration fee every two years for each health club facility operated and upon verification of the information, payment of the registration fee and posting of a security, if not exempt from that requirement pursuant to the rules, they shall be issued a certificate of registration and a Notice which must be displayed in a prominent place at the main entrance of each health club facility.  The notice shall state the following:  NOTICE -- This facility is registered as a seller of health club services by the State of New Jersey, Department of Law and Public Safety, Division of Consumer Affairs, 124 Halsey Street, Newark, New Jersey 07102.  Such registration does not mean that this facility has been approved or endorsed by that agency. Patrons are advised that under New Jersey law, facilities offering contracts for health club services for longer than a three-month period must post with the Division of Consumer Affairs security against failure to provide such services.  A registrant may note in advertising that it is a registered health club but shall not state or imply that the facility has been approved or endorsed by the Division.

·          Where a facility claims exemption from registration because less than 40 percent of its square footage is devoted to health club services, the facility shall calculate the 40 percent square footage on the basis of the total indoor square footage of the establishment including the exercise equipment area(s), sauna(s), swimming pool(s), locker facilities and shower areas.  The facility shall return a completed application form to the Division of Consumer Affairs along with documentation of the "less than 40 percent" claim, which shall include:  1. A schematic drawing noting the dimensions and use of each area of the facility; 2. A list of the various rooms/spaces with the total square footage of each room/space;  3. A statement of the total square footage of the facility;  and 4. Two sample advertisements or brochures if any have been published by the have been published by the facility within a three month period prior to the date documentation is filed.

·         If, after the filing of the claim of exemption from registration, a facility makes an internal or external change in space allocation which changes the relationship of the health club services area to the total premises, the facility shall file a revised schematic diagram with the Division within 90 days after the date when the change in space allocation is completed.  A claim of exemption from registration because less than 40 percent of the facility's square footage is devoted to health club services shall be subject to on-site verification at the discretion of the New Jersey Division of Consumer Affairs.

·         A separate Declaration of Exemption from Security Requirement shall be filed for each facility claiming exemption from the bond/letter of credit/security requirement because its membership contracts are for a period no longer than three months, accompanied by a copy of a written contract as proof that the contract duration is for a period of no longer than three months.

·         Each establishment which has posted a bond as security shall maintain complete and accurate records relating to the bond and premium payments made thereon. 

·         Each establishment which has posted a letter of credit or provided other security acceptable to the New Jersey Division of Consumer Affairs of the Division shall maintain complete and accurate records relating to those items and these records shall be available on the premises of the establishment for review by the New Jersey Division of Consumer Affairs or his or her designated representative on any operating day.

WHAT ARE THE REQUREMENTS THAT A HEALTH CLUB SERVICES CONTRACT MUST MEET TO SATISFY THE NEW JERSEY CONSUMER FRAUD ACT HEALTH CLUB LAWS?

To comply with the New Jersey Consumer Fraud Act health club laws, every contract for health club services must:

·          Be in writing, with a copy being given to the buyer at the time the buyer signs the contract.

·         Specifically set forth in a conspicuous manner on the first page of the contract the buyer's total payment obligation for health club services to be received pursuant to the contract.

·         If the health club facility maintains a bond, irrevocable letter of credit or securities, moneys or other security pursuant to the New Jersey Consumer Fraud Act health club laws, set forth that a bond, irrevocable letter of credit or securities, moneys or other security is filed or deposited with the New Jersey Division of Consumer Affairs to protect buyers of these contracts who are damaged or suffer any loss by reason of breach of contract or bankruptcy by the seller.

·         Shall not obligate the buyer for more than three years from the date the contract is signed by the buyer. 

·         If for new or increased health club services, provide that it may be cancelled by the buyer for any reason at any time before midnight of the third operating day after the buyer receives a copy of the contract.  To cancel a contract the buyer shall notify the health club of cancellation in writing, by registered or certified mail, return receipt requested, or personal delivery, to the address specified in the contract. All moneys paid pursuant to the cancelled contract shall be fully refunded within 30 days of receipt of the notice of cancellation. If the customer has executed any credit or loan agreement through the health club to pay all or part of health club services, the negotiable instrument executed by the buyer shall also be returned within 30 days. The contract shall contain a conspicuous notice printed in at least 10-point bold-faced type as follows:  "NOTICE TO CUSTOMER You are entitled to a copy of this contract at the time you sign it. You may cancel this contract at any time before midnight of the third operating day after receiving a copy of this contract. If you choose to cancel this contract, you must either: 1. Send a signed and dated written notice of cancellation by registered or certified mail, return receipt requested; or 2. Personally deliver a signed and dated written notice of cancellation to:  ..................................... (Name of health club) ..................................... (Address of health club).  If you cancel this contract within the three-day period, you are entitled to a full refund of your money. If the third operating day falls on a Sunday or holiday, notice is timely given if it is mailed or delivered as specified in this notice on the next operating day. Refunds must be made within 30 days of receipt of the cancellation notice to the health club.  'Operating day' means any calendar day on which patrons may inspect and use the health club's facilities and services during a period of at least eight hours, except holidays and Sundays."

·          Shall provide that it is subject to cancellation by notice sent by registered or certified mail, return receipt requested, or personally delivered, to the address of the health club specified in the contract upon the buyer's death or permanent disability, if the permanent disability is fully described and confirmed to the health club by a physician.  In a cancellation under this subsection, the health club may retain the portion of the total contract price representing the services used plus reimbursement for expenses incurred in an amount not to exceed 10% of the total contract price.

·          Shall provide that it is subject to cancellation by notice sent by registered or certified mail, return receipt requested or personally delivered, to the address of the health club specified in the contract upon the buyer's change of permanent residence to a location more than 25 miles from the health club or an affiliated health club offering the same or similar services and facilities at no additional expense to the buyer.  In such a cancellation, the health club may require proof of the new permanent residence and may retain a prorated share of the total contract price based upon the date the notice was received plus reimbursement for expenses incurred in an amount not to exceed 10% of the total contract price.

·          Shall provide that if a health club facility is closed for a period longer than 30 days through no fault of the buyer of the health club services contract, the buyer is entitled to either extend the contract for a period equal to that during which the facility is closed or to receive a prorated refund of the amount paid by the buyer under the contract.

·          Shall not obligate the buyer to renew the contract.

·         If the health club facility is not in existence on the date the contract is executed, the contract shall provide that a buyer of a contract may cancel the contract if the facility is not open for business on a date which shall be set forth in the contract and receive a full refund of any deposit or payment on the contract.

·         Shall not require the execution of any note or series of notes by the buyer which, if separately negotiated, will cut off as to third parties any right of action or defense which the buyer has against the health club.

A right of action or defense arising out of a health club services contract which the buyer has against the health club shall not be cut off by assignment of the contract, regardless of whether the assignee acquires the contract in good faith and for value. 

A health club may not charge and accept a down payment exceeding 25% of the total contract price prior to opening the health club facility.

WHEN CAN A CUSTOMER CANCEL A HEALTH CLUB CONTRACT UNDER THE NEW JERSEY CONSUMER FRAUD ACT HEALTH CLUB LAWS?

·         Any health club services contract entered into in reliance upon any fraudulent or substantially and willfully false or misleading information, representation, notice or advertisement of the health club is voidable at the buyer’s option.

·         Any health club services contract which does not comply with the applicable provisions of the New Jersey Consumer Fraud Act health club laws is voidable at the buyer’s option.

·         Any waiver by the buyer of the provisions of the New Jersey Consumer Fraud Act health club laws is void.

CAN I HANDLE A NEW JERSEY CONSUMER FRAUD ACT DISPUTE BY MYSELF?

Some people can and do successfully handle cases themselves, from filing the first paperwork to the collection of a judgment.  However, many other people also make mistakes that lead to the dismissal of their cases or that result in the entry of a money judgment against them.  The greater the money at stake, the greater the reason to consider using the services of a competent attorney licensed to practice law in New Jersey to handle part or all of the case.  The following are reasons to use an attorney to handle part or all of your case:

·         court fees often change

·         court rules often change

·         court employees cannot give you “free” legal advice and a judge may refuse to let you claim that you were right in taking an action (or in deciding not to take action) because you relied on advice from such employees

·         court forms available on websites may not cover every situation you may face in court

·         each case has its own particular legal issues and therefore, its own challenges

·         it is very common for people to file inadequate or incorrect complaints that result in the complaints or answers to complaints being rejected by the court or being dismissed by the court after filing and before or after trial because of procedural deficiencies  

·         it is not uncommon for judges to get very frustrated by an unrepresented party’s lack of preparation or ignorance of the facts or law of the case. 

·         a court has the power to punish unprepared parties or parties who make mistakes, such as by throwing their case out of court or limiting what they can present at trial. 

·         New Jersey has many published cases, laws, regulations, court rules and rules of evidence that are very tricky and that can be used to prevent you from doing much of what you want to do at trial. 

·         it is very common for courts to refuse to allow a party to use or refer to documents or items at trial that the person themselves never prepared.  Often parties stumble into court with a video, photograph, bill or affidavit or other form of written statement, thinking they are going to use it as proof that they lost money or that they are not responsible for someone else’s damages, only to have a judge tell the parties that it is not going to even consider such items or documents. 

·         without the proper preparation, items and documents may never be considered by the court.  Also, if there are any legal issues to be dealt with at trial, you must be prepared to argue them, which may require you to refer to court rules, evidence rules, laws, regulations or published cases. 

·         you cannot show up at court expecting the judge hearing your case to explain court rules, evidence rules, court procedure or the details of the law that applies to your case.  The judge hearing your case is not permitted to give you legal advice.

It is important to remember that even if you have an attorney, you could lose your case.  No attorney can guarantee results in civil disputes.  Hiring an attorney to handle part or all of your case does not guarantee your success.  However, it may provide the assistance you need to win your case, to settle your case or to avoid certain mistakes.

DOES THE LAW OFFICE OF PAUL DEPETRIS HAVE EXPERIENCE HANDLING NEW JERSEY CONSUMER FRAUD ACT DISPUTES?

Yes.  Paul DePetris has performed the following tasks:

·         represented consumers and the sellers of goods and services in New Jersey Consumer Fraud Act  disputes.

·         appeared in court in cases involving New Jersey Consumer Fraud Act disputes.

·         mediated, arbitrated and tried New Jersey Consumer Fraud Act cases.

WHAT IF I DON’T HAVE ENOUGH MONEY TO HIRE AN ATTORNEY TO HANDLE MY CASE FROM BEGINNING TO END?

In many situations, the Law Office of Paul DePetris offers alternatives to handling cases for an hourly fee, such as by offering to prepare the court paperwork for you or helping you handle your claim by yourself.  Such flexible methods may allow you to keep the amount legal fees you spend on your case to a fixed sum, while providing you the help you need to handle your case.  For a no cost phone consultation about what the Firm might be able to do for you, call or write an email to Mr. DePetris at:  609-714-2020 or consumerlaw@newjerseylemon.com.