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Tuesday, July 12, 2016, 22:35

Troubled fitness chain shuts down operations

By Li Yinze

Troubled fitness chain shuts down operations
 A California Fitness in Wan Chai is closed on July 12, 2016. (Photo by Parker Zheng / China Daily)

HONG KONG -  California Fitness, the gym chain badly battered by accusations of unconscionable sales practices, shut down its entire operations on Tuesday.

The operating capital of the chain’s parent company, JV Fitness, has been frozen by court order. The company also announced that its mYoga and Leap fitness centers had also gone dark until further notice.  

The company has been reported to be looking for buyers, while creditors are bearing down seeking a court order to wind up the company’s affairs.

As all 12 centerswere closed,the city’s consumer watchdog— the Consumer Council —recorded 747 inquiries and 199 complaints on JV Fitness since last Monday. Most of these were related to the termination of contracts, involving a total of HK$5.86 million, according to the watchdog’s Chief Executive Gilly Wong Funghan.

She said the council will attach great importance to then case as it was themost serious ever recorded in affecting the largest number of people.

Wong urged customers paying member fees by installments to contact the cardissuing banks about policies regarding refunds and termination of further autopayments.

Hong Kong Monetary Authority’s Executive Director Carmen Chu said that those who paid automatically with their credit cards should send written instructions to the gym regarding the cancellation of the remainder of their payments.

If the merchant ignores the consumer’s instructions, the consumer can provide a copy of the cancellation instructions to the bank and ask it to help contact the merchant to seek reimbursement of them disputed amount and cancellation of the autopay arrangement, according to Chu.

But she noted that although banks would do their utmost to provide assistance, there was no guarantee of success.

On Monday, two California Fitness executives were arrested by the Customs and Excise Department on suspicion of accepting payments from clients in violation of the Trade Descriptions Ordinance.

The chaos has left clients of California Fitness facing financial losses. A member of the Whampoa branch, surnamed Shen, told of paying HK$10,000 for a membership last August, then extending the agreement until next March.  

"I renewed my membership agreement months ago, but I wasn’t told about the possible closure of the branch at that time,” she told China Daily.

Shen described her reaction as one of shock as she learned that all branches have closed. “As no more services are being provided by California Fitness, I’ve decided to try the outdoor jogging tracks along the Victoria Harbour near my home,” she said.

Shen is not the only club member left in the lurch. Speaking on a radio program on Tuesday, labor sector lawmaker Tang Ka-piu said the company has more than 100,000 members, involving a sum of HK$100 million.

Tang said the rupture met the standard for a “major case”. “The SAR government should regulate pre-payments, as the amounts of money involved in similar cases are always very high,” he suggested.

The company’s employees also are seeking unpaid wages. Dozens of its trainers and other employees went to Hong Kong Police Headquarters in Wan Chai to report alleged illegal money transfers of the company and demanding that JV Fitness pay their salaries.

 
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