Whereas, The deferred operation of this act would tend to defeat its purpose, which is to immediately regulate contracts between health spas and their customers, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.
Be it enacted by the Senate and House of Representatives
in General Court assembled, and by the authority of the same,
SECTION 1. Chapter 93 of the General Laws is hereby amended by adding after section 77, added by chapter 279 of the acts of 1985, the following eleven sections:-
Section 78. For purposes of sections seventy-nine to eighty-eight, inclusive, the following words and terms shall have the following meanings:-
"Buyer", any person who enters into a contract for health club services with a health club.
"Contract for health club services", a contract which has the primary purpose of providing a person with the right to use the facilities of a health club or with instruction, training, or assistance by a health club in the preservation, maintenance, encouragement or development of physical fitness, conditioning or well-being, including physical culture, bodybuilding, exercising, weight control, figure development or the teaching of martial arts including judo, karate and self-defense, or any similar course of physical fitness training or assistance.
"Health club", each facility or location or group or chain of facilities or locations, in which any person, firm, corporation, partnership, unincorporated association, franchise or other business enterprise offers facilities for or instruction, training or assistance in the preservation, maintenance, encouragement or development of physical fitness, conditioning or well being. Such term shall include, but not be limited to, health spas, sports, tennis, racquet ball, platform tennis and health clubs, figure salons, health studios, gymnasiums, weight control centers or studios, martial arts and self-defense schools, or any other similar course of physical training.
"Seller", any person, firm, corporation, partnership, unincorporated association, franchise, franchisor, or other business enterprise which operates a health club or which offers or enters into contracts for health club services.
Section 79. Prior to the execution of any contract for health club services and for a period of five years after initially commencing operation of a health club, every seller which sells contracts for health club services shall, for each individual health club location or facility, maintain a bond issued by a surety company admitted to do business in the commonwealth. The principal sum of the bond shall be twenty-five thousand dollars for each health club location or facility, and evidence of such bond shall be filed with the secretary of state within thirty days of its procurement. The bond shall be in favor of the commonwealth for the benefit of any buyer or class of buyers who suffers any loss or damage because a health club facility ceases operation, fails to open or fails to honor a buyer's right to cancel a contract for health club services pursuant to section eighty-two, and who obtains a judgment for said loss or damage which is not satisfied within thirty days of its entry. Said bond shall provide for the surety to pay the amount of such unsatisfied judgment either directly to said buyer or class of buyers or, if the attorney general obtains said judgment on behalf of said buyer or buyers and so directs, then to the attorney general for distribution to said buyers.
The liability of the surety on the bond shall be limited to indemnifying the claimant only for his actual damages. The aggregate liability of the surety to all persons for all breaches of the conditions of the bonds provided for herein shall in no event exceed the amount of the bond.
A change in ownership of a health club or location shall not release, cancel or terminate liability under any bond filed for such health club or location under this section as to any buyer who purchases a health club contract while such bond is in effect, unless the transferee, purchaser, successor or assign of such health club or location obtains a bond under this section for the benefit of such buyer. The fact that any health club is in bankruptcy proceedings, or that its debts have been discharged in bankruptcy, shall not be a bar or defense to a surety's obligation under any such bond.
Section 80. No contract for health club services shall be for a term measured by the life of the buyer. No contract for health club services shall be for a term longer than twenty-four months, except that upon expiration of the contract, the seller may offer to the buyer the right to renew his contract for a similar, shorter or longer period not to exceed twenty-four months.
No contract for health club services shall require payments or financing by the buyer over a period in excess of twenty-five months from the date on which the contract is executed. The installment payments shall be in substantially equal amounts exclusive of the down payment and shall be required to be made at substantially equal intervals, not more frequently than one payment per month.
No contract for health club services may contain any provisions whereby the buyer agrees not to assert against the seller or any assignee or transferee of the health club services contract any claim or defense arising out of the health club services contract or the buyer's activities at the health club. No contract for services may require the buyer to execute a promissory note or series of promissory notes which, when negotiated, cuts off as to third parties a defense which the buyer may have against the seller. No contract may be assigned by one health club to another health club without written consent of the buyer.
Section 81. Every contract for health club services shall provide clearly and conspicuously in writing that such contract may be cancelled within three business days after the date of receipt by the buyer of a copy of the written contract or written receipt indicating the buyer's payment for health club services. The contract for health club services shall contain the following written notice in at least ten point bold type:
"CONSUMER'S RIGHT TO CANCELLATION. YOU MAY CANCEL THIS CONTRACT WITHOUT ANY PENALTY OR FURTHER OBLIGATION BY CAUSING A WRITTEN NOTICE OF YOUR CANCELLATION TO BE DELIVERED IN PERSON OR POSTMARKED BY CERTIFIED OR REGISTERED UNITED STATES MAIL WITHIN THREE (3) BUSINESS DAYS OF THE DATE OF THIS CONTRACT OR THE DATE OF YOUR RECEIPT TO THE ADDRESS SPECIFIED IN THIS CONTRACT.".
Notice of the buyer's right to cancel and the method of cancellation under this section shall also be posted clearly and conspicuously on the premises of the health club.
The notice of the buyer's cancellation of his contract shall be in writing and delivered in person or by certified or registered United States mail at the address specified in the contract. Such notice shall be accompanied by the contract forms, membership cards and any other documents or evidence of membership previously delivered to the buyer. All monies paid pursuant to such contract shall be refunded within fifteen business days of receipt of such notice of cancellation. If the buyer has executed any credit or loan agreement to pay for all or part of the health club services, any such negotiable instrument shall be void upon cancellation under this section and shall also be returned to the buyer within said fifteen days.
Section 82. Every contract for health club services shall provide clearly and conspicuously in writing that after the expiration of the three day period for cancellation as provided in section eighty-one, in the event of the buyer's death, the buyer's estate may cancel the contract for health club services. The contract shall also provide that the buyer may cancel if he becomes significantly physically or medically disabled for a period in excess of three months, or if the health club services or facilities are not available to the buyer because the seller fails to open a planned health club or location, permanently discontinues operation of the health club or location, or substantially changes the operation of the health club or location. The contract shall also provide that the buyer may also cancel if he moves his residence to a location more than twenty-five miles from a health club operated by the seller or a substantially similar health club which will accept the seller's obligation under the contract. Nothing contained herein shall restrict or prohibit the seller from offering or providing in such contract additional or broader reasons for cancellation.
The seller may require reasonable evidence of the reason for cancellation by the buyer pursuant to this section. The contract for health club services shall contain the following notice captioned in at least ten point bold type:
"additional rights to cancellation
You or your estate may also cancel this contract for any of the following reasons:
if upon a doctor's order, you cannot physically or medically receive the services because of significant physical or medical disability for a period in excess of three months;
in case of your death;
If the health club services to be provided under this contract are not available because the seller fails to open a planned health club or location, permanently discontinues operation of a health club or location, or substantially changes the operation of a health club or location.
If you move your residence more than twenty-five miles from any health club operated by the seller or a substantially similar health club which will accept the seller's obligation under the contract.".
All monies paid by the buyer pursuant to a contract for health club services which has been cancelled for one of the reasons contained in this section shall be refunded to the buyer or his estate within fifteen days of the seller's receipt of such notice of cancellation; provided, however, that the seller may retain the portion of the total contract price representing the amount of time that the services or facilities were used by the buyer prior to cancellation; and provided, further, that the seller may demand the reasonable cost of goods and services which the buyer has consumed or wishes to retain after cancellation of the contract. In no instance shall the seller demand more than the full contract price from the buyer. If the buyer has executed any credit or loan agreement to pay for all or part of the price of the contract for health club services, any such negotiable instrument executed by the buyer shall also be returned and terminated within fifteen days. The buyer shall no longer be liable for any obligation under such credit or loan agreement.
Section 83. No assignee or creditor who takes a note or other obligation as consideration for a contract for health club services shall fail to honor the consumer's right of cancellation as provided in section eighty-one or eighty-two. No assignee of a contract shall fail to give notice of the assignment to the consumer. A notice of assignment shall be in writing addressed to the consumer at the address shown on the contract and shall identify the contract.
Section 84. It is hereby declared to be an unfair and deceptive trade practice in violation of chapter ninety-three A for a seller, or his agents, employees or other representatives to:
(1) misrepresent directly or indirectly, including in its advertising, promotional materials, or in any other manner, the size, location, available facilities, or equipment of its health club or health clubs, or the location or locations at which its services, facilities or equipment will be offered;
(2) misrepresent directly or indirectly, including in its advertising, promotional materials, or in any other manner, the nature of its courses, membership programs, training devices or methods, services, pricing structure, price discounts, sales or offers;
(3) misrepresent, directly or indirectly, including in its advertising, promotional material, or in any other manner, the number, qualifications, title, status, training or experience of its personnel, agents, employees or other representatives, whether by means of endorsements or otherwise;
(4) use or refer, directly or indirectly, including in its advertising, promotional material, or in any other manner, to fictional organizational divisions or personnel position titles, or make any representation which has the tendency or capacity to mislead or deceive consumers as to the size or importance of the health club, its franchisor, parent, subsidiary or affiliated business, its divisions, or its personnel, or in any other material respect;
(5) fail to clearly and conspicuously post on its health club premises all of its courses and membership prices, discounts, sales or offers;
(6) misrepresent, directly or indirectly, including in its advertising, promotional material, or in any other manner, the nature, extent or availability of any services, guidance, instruction, counseling, assistance, or other attention which the health club will provide to buyers;
(7) misrepresent, directly or indirectly, including in its advertising, promotional material, or in any other manner, or fail to disclose the buyer's rights to cancel under sections eighty-one to eighty-three, inclusive; or
(8) violate or fail to comply with any other provision of sections seventy-eight to eighty-eight, inclusive.
This section shall not be construed to prevent other acts or practices of a seller from being declared to be in violation of said chapter ninety-three A.
Section 85. Any contract for health club services which does not comply with the applicable provisions of this chapter shall be void and unenforceable as contrary to public policy. Any waiver by the buyer of the provisions of this chapter shall be deemed void and unenforceable by the seller as contrary to public policy.
Section 86. Any buyer who has suffered any injury as a result of a violation of sections seventy-eight to eighty-eight, inclusive, or the attorney general, may bring an action for recovery of damages or other relief, including injunctive relief, multiple damages and attorney's fees, as and to the extent provided for under chapter ninety-three A. Nothing in sections seventy-eight to eighty-eight, inclusive, shall be construed so as to nullify or impair any right or rights which a buyer may have against a seller at common law, by statute, or otherwise. The provisions of said sections seventy-eight to eighty-eight, inclusive, are not exclusive and do not relieve the seller or his assignees or the contracts subject to said sections from compliance with all other applicable provisions of law.
Section 87. Any seller or his assignees who violates any provision of sections seventy-eight to eighty-eight, inclusive, or who shall counsel, aid or abet such violation shall be liable for a civil penalty of not more than twenty-five hundred dollars for each such violation. The attorney general may file a civil action in the superior or district court in the name of the commonwealth to recover such penalties.
Section 88. In addition to other remedies provided herein, the attorney general may bring an action on behalf of the commonwealth to enforce the bonding provisions of section seventy-nine.
SECTION 2. The provisions of section seventy-nine shall not apply to any health club or location which is being operated as of the effective date of this act and has been operated continuously at the same location since its operation commenced.
The provisions of section seventy-nine shall apply to any health club or location the ownership of which changes in any way on or after the effective date of this act.
SECTION 3. This act shall take effect on January first, nineteen hundred and eighty-six.