Customs officers arrest an executive (center) from California Fitness on Monday. Another female executive of the company was also arrested on Monday. (Provided to China Daily)
HONG KONG - Financially beleaguered local gym chain – California Fitness – may face more charges other than knowingly charging customers when it was unable to provide the necessary services, a practicing lawyer said.
This is after two executives with the company were arrested by customs officers on Monday.
The arrest was the first after the company’s Whampoa club in Hung Hom abruptly closed. Another two of its gym clubs, in Tuen Mun and Quarry Bay, subsequently suspended services after claims were filed by landlords for overdue rents and management fees of up to HK$5 million.
Adding to these woes about 300 employees of the gym center, owned by JV Fitness, on Sunday threatened to go on a strike in two days if the company fails to settle the outstanding payrolls for June.
The two arrested – a 57-year-old man and a 45-year-old woman – were taken by the Hong Kong Customs and Excise Department during a raid of JV Fitness’ office in Kowloon Bay. Both were suspected of violation of the Trade Descriptions Ordinance while accepting payments from customers. They were released on bail.
Practicing barrister and lawmaker Priscilla Leung Mei-fun told China Daily it is highly likely that the case against the company is a prima facie one.
Leung quoted the previous case of Chow Tung-shan, former assistant commissioner for labor, who was found guilty of taking HK$9,000 from two students for language courses when he knew his language center would soon be closed.
According to the ordinance, breaches of relevant stipulations may incur a maximum sentence of five years in prison and a fine of HK$500,000. Customs said management of the company may be criminally liable once it is proven that the breach is intentionally approved, neglected or condoned by management.
Leung noted that customers in this scenario may face tougher challenges in recouping their losses as they are not given priority in liquidation cases. In the event of liquidation, employees’ rights and entitlements will be given greater priority than those of customers, said Leung.
Leung revealed that she has received more than 200 complaints from the fitness giant’s customers, totaling more than HK$10 million. For customers, their choice lies in either seeking claims at the Small Claims Tribunal or class action lawsuits through the Consumer Legal Action Fund by the Consumer Council, she said.
The fitness center was publicly named and shamed by the Consumer Council for its unscrupulous sales tactics in coercing customers to buy unnecessary and long-term services.
Leung said that the investigation by customs may lead to more charges against the gym, including unfair trade practices.