ABC Financial Services, The Arena Martial Arts Facing Lawsuit Over ‘Automatic’ Membership Renewal

New to ClassAction.org? Read our Newswire Disclaimer

ABC Financial Services, Inc. and The Arena Martial Arts are facing a proposed class action that claims the defendants illegally charge health studio members an automatic month-to-month membership fee after their original agreements expire. The suit takes particular issue with the companies’ alleged failure to disclose the details of the automatic renewal process, as well as the supposed unlawfully difficult method through which individuals can cancel their memberships.

The plaintiff claims he signed a Health Studio Membership Agreement (HSMA) with the defendants – which respectively process payments for and operate a health, fitness, and training studio – in August 2015 that required him to pay $99.00 per month, totaling $2,424.00, for a two-year term. Two years later, the case continues, the defendants informed the plaintiff that his membership would continue month-to-month and that he would be required to pay a cancelation fee and provide 30 days’ notice if he wanted to cancel his membership. The plaintiff claims he disputed the allegedly unlawful automatic charges but was forced to pay the defendants after they referred his account to a debt collector and harmed his credit rating.

According to the complaint, the defendants violated state law by:

• automatically enrolling membership plans to “open-ended/month-to-month” payments after their initial terms were over;
• requiring members to pay a $50.00 cancelation fee and provide 30 days’ notice to cancel the automatic payments;
• failing to include in membership agreements “a statement printed in a size at least 14-point type or presented in an equally legible electronic format that discloses the initial or minimum length of the term of the contract”;
• allowing members to provide notice of cancelation only by mail, not in person or through email; and
• failing to specify in agreements “the requisite rescission period” for memberships exceeding $1,500.00.