Bill H.4510

FILED ON: 1/31/2022

HOUSE . . . . . . . . . . . . . . . No. 4510

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-Second General Court
(2021-2022)

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An Act relative to health club memberships reform.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 78 of chapter 93 of the General Laws, as appearing in the 2018 Official Edition, is hereby amended by inserting the following definitions:-

“Automatic renewal”, a plan or arrangement in which a contract for health club services is automatically renewed at the end of a definite term for a subsequent term.

“Automatic renewal offer terms”, any of the following terms: (i) a requirement that the consumer cancel or the contract for health club services will continue until the consumer cancels; (ii) the cancellation policy that applies to the automatic renewal; (iii) the recurring charges that will be charged to the consumer, and the amount the charge may change upon automatic renewal, if that is the case, and the amount to which the charge will change, if known; (iv) the length of the automatic renewal term or that the service is continuous, unless the length of the term is chosen by the consumer; or (v) the minimum purchase obligation, if any.

SECTION 2. Said section 78 of chapter 93 of the General Laws, as so appearing, is hereby further amended by inserting after the definition of “Buyer”, the following definition:-

"Continuous service", a plan or arrangement in which a contract for health club services continues until the consumer cancels the service.

SECTION 3. Said chapter 93 of the General Laws, as so appearing, is hereby amended by inserting after section 78A the following new section:-

Section 78B. A health club shall be required to have their membership categories clearly posted for consumers to view. Such posting shall contain the cost per category. Such categories shall include any discounts offered, e.g., second member discounts, new member fees, and any other membership fee category that the health club offers to consumers.

SECTION 4. Section 79 of said chapter 93 of the General Laws, as so appearing, is hereby amended by striking out the first paragraph and inserting in place thereof the following paragraphs:-

Prior to the execution of any contract for health club services, every seller which sells contracts for health club services, except weight loss and control services which do not provide physical exercise facilities and classes, and which do not obligate the customer for more than thirty days, and which do not require an initiation fee as a condition of said contract, 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 either twenty five thousand dollars for each health club location or facility that sells contracts with no more than one hundred fifty persons; fifty thousand dollars for each health club location or facility that sells contracts with no more than three hundred persons; seventy five thousand dollars for each health club location or facility that sells contracts with no more than seven hundred fifty persons; or one hundred fifty thousand dollars for each health club location or facility that sells contracts with greater than seven hundred fifty persons.

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-one or section eighty-two. Any person, or the attorney general, may make a claim for recovery against the bond for an act or omission on which the bond is conditioned if the act or omission occurred during the term of the bond. Every bond shall also provide that no claim may be made against the bond unless the claimant provides the bondholder notice of the claim within 1 year after the act or omission giving rise to the claim. Said bond shall provide for the surety to pay the amount of loss or damage either directly to said buyer or if the attorney general makes a claim against the bond, to the attorney general for distribution to buyers who have suffered loss or damage as a result of an act or omission on which the bond is conditioned.

Every seller required to maintain a bond shall file a copy of the bond(s) obtained with the Office of Consumer Affairs and Business Regulation prior to the execution of any contract for health club services and annually thereafter.

SECTION 5. Said chapter 93 of the General Laws, as so appearing, is hereby amended by inserting after section 79 the following new section:-

Section 79A. At least 30 days prior to a health club offering for sale, advertising, or executing or causing to be executed any contract for health club services in this Commonwealth, in which services provided are to be rendered over a period of more than three months, each location of the health club shall be properly registered with the Office of Consumer Affairs and Business Regulation at the time of the offer, advertisement, sale, or execution of a health club contract. If any health club required to register pursuant to the preceding sentence closes permanently, it shall notify the Office of Consumer Affairs and Business Regulation of said permanent closure within fourteen days of the date of the permanent closure. Within five business days of receiving notice of a permanent closure, the Office of Consumer Affairs and Business Regulation shall notify the Consumer Protection Division of the Attorney General’s Office that it has received notice of a permanent closure of a registered health club. Said notice shall include the name and location of the health club that permanently closed, the date of the permanent closure, and a copy of the most recent bond maintained by the health club.

SECTION 6. Section 80 of said chapter 93 of the General Laws, as so appearing, is hereby amended by striking the third paragraph and inserting in place thereof the following two paragraphs:-

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 the prior, contemporaneous, and informed written consent of the buyer. Consent to an assignment is contemporaneous if it was obtained within 30 days of the date of the assignment. Consent to an assignment is informed if the seller provided the buyer with the proposed assignee’s name, location, and information about services offered by the proposed assignee. The seller must deliver a copy of every contract for health club services to the buyer at the time the parties entire into the contract for health club services. The date of delivery shall be reflected in the contract.

Any seller of a contract for health club services making an automatic renewal or continuous service offer to a buyer shall: (a) present the automatic renewal offer terms or continuous service offer terms in a clear and conspicuous manner before the subscription or purchasing agreement is fulfilled and in visual proximity, or in the case of an offer conveyed by voice, in temporal proximity, to the request for consent to the offer. If the offer also includes a free gift or trial, the offer shall include a clear and conspicuous explanation of the price that will be charged after the trial ends or the manner in which the pricing will change upon conclusion of the trial; (b) obtain the buyer’s written consent to the agreement containing the automatic renewal offer terms or continuous service offer terms, including the terms of an automatic renewal offer or continuous service offer that is made at a promotional or discounted price for a limited period of time, prior to charging the consumer; and (c) provide a written acknowledgment that includes the automatic renewal or continuous service offer terms, cancellation policy, and information regarding how to cancel in a manner that is capable of being retained by the consumer. If the offer includes a free gift or trial, the business shall also disclose in the acknowledgment how to cancel and allow the consumer to cancel before the consumer pays for the goods or services.

SECTION 7. Chapter 93 of the General Laws, as so appearing, is hereby amended by striking out the section 81, and inserting in place thereof the following section:-

Section 81. A buyer may cancel a contract for health club services without penalty within five business days after the date of receipt by the buyer of a copy of the contract for health club services and, upon notice to the health club of the buyer’s intent to cancel, a buyer shall be entitled to receive a refund of all monies paid under the contract.

Every contract for health club services shall provide clearly and conspicuously in writing that such contract may be cancelled within five business days after the date of receipt by the buyer of a copy of the contract 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 NOTICE OF YOUR CANCELLATION TO BE DELIVERED BY PHONE NUMBER (… health club shall insert a toll-free telephone number), OR BY ELECTRONIC MAIL (… health club shall insert name and an electronic mail address that is used by the seller for customer service), OR BY THE WEB PAGE (… health club shall insert website name that is used by the seller) OR POSTMARKED BY CERTIFIED OR REGISTERED UNITED STATES MAIL WITHIN FIVE(5) BUSINESS DAYS OF THE DATE YOU RECEIVED THIS CONTRACT FOR HEALTH CLUB SERVICES.

IF THE HEALTH CLUB GOES OUT OF BUSINESS OR REFUSES TO GIVE YOU A REFUND, THERE MAY BE A BOND OR LETTER OF CREDIT UNDER WHICH YOU ARE ENTITLED TO COLLECT. THE ATTORNEY GENERAL OF THE COMMONWEALTH OF MASSACHUSETTS MAY BE ABLE TO ASSIT YOU WITH MAKING A CLAIM AGAINST THE BOND. YOU MAY ALSO BRING A PRIVATE RIGHT OF ACTION. IF YOUR RIGHTS ARE VIOLATED, YOU MAY CONTACT THE OFFICE OF THE ATTORNEY GENERAL.”

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.

Every seller must provide all of the following methods of delivery of notice of the buyer’s intent to cancel a contract for health club services pursuant to either section eighty-one or section eighty-two: (i) a toll-free telephone number, (ii) electronic mail to an electronic mail address specified in the buyer’s contract, or if there is not an electronic mail address specified, to any electronic mail address that is used by the seller for customer services, (iii) the seller’s website, (iv) certified or registered United States mail to the address specified in the contract, or if there is not an address specified, to any address where the seller conducts business, and (v) in-hand delivery to any address where the seller conducts business. Such notice shall include sufficient information for the seller to identify the buyer.

All monies paid pursuant to such contract shall be refunded within ten 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 ten business days.

SECTION 8. Said chapter 93, as so appearing, is hereby amended by striking out section 82, and inserting in place thereof the following 2 new sections:-

Section 82. In the event of a buyer’s death, the buyer’s estate may cancel a contract for health club services.

A contract for health club services may be cancelled by a buyer if the buyer becomes significantly physically or medically disabled for a period in excess of three months, provided that the buyer provides the health club a signed statement from the buyer’s doctor, physician assistant, or nurse practitioner verifying that the buyer is physically unable to use a substantial portion of the health club services for a period in excess of three months. The buyer shall have the option to be relieved of liability for payment on that portion of the contract term for which the buyer is disabled.

A buyer may cancel a contract if the health club services facilities are not available to the buyer because the seller fails to open a planned health club or location, or substantially changes the operation of the health club or location, or if the buyer changes residence to a location more than ten 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.

Every contract for health club services shall provide clearly and conspicuously in writing that after the expiration of the five-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 the buyer 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 or substantially changes the operation of the health club or location. The contract shall also provide that the buyer may also cancel if the buyer changes residence to a location more than ten 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 or substantially changes the operation of a health club or location; or

if you move either your residence or your place of employment more than ten 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 the estate within ten business 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 ten business days. The buyer shall no longer be liable for any obligation under such credit or loan agreement.

Section 82A. A contract for health club services shall be considered terminated automatically if the designated facility closes permanently and the health club does not provide the option of a substantially similar health club. A facility shall not be considered to have closed permanently if it closes for a temporary, reasonable period of time for renovations to all or a portion of the facility, or because of a fire, a flood, or another act of God not within the reasonable control of the health club. If a facility closes temporarily, the seller shall automatically freeze buyers’ accounts and not collect membership fees for any period during which the facility is closed.

If a temporary closure is planned, the seller shall conspicuously post a notice with information about the temporary closure at each entrance to the impacted facility and on the seller’s website in advance of the closure. Further, the seller shall send each buyer associated with the impacted facility information about the temporary closure, including the date the facility temporarily closed and the date the facility expects to reopen in advance of the closure. And, within fourteen days of the date of any temporary closure, the seller shall provide notice of the date the impacted facility temporarily closed and the date it expects to reopen, which date shall be within a reasonable period of time from the time the facility temporarily closed, to the Office of Consumer Affairs and Business Regulation.

If a temporary closure is unplanned, within twenty-four hours of any temporary closure, the seller shall conspicuously post a notice with information about the temporary closure at each entrance to the impacted facility and on the seller’s website. Further, within forty-eight hours of any temporary closure, the seller shall send each buyer associated with the impacted facility information about the temporary closure, including the date the facility temporarily closed and the date the facility expects to reopen. And, within fourteen days of the date of any temporary closure, the seller shall provide notice of the date the impacted facility temporarily closed and the date it expects to reopen, which date shall be within a reasonable period of time from the time the facility temporarily closed, to the Office of Consumer Affairs and Business Regulation.

SECTION 9. Section 83 of said chapter 93, as so appearing, is hereby amended by striking the figure “section eighty-one” and inserting in place thereof the following:- sections eighty-one

SECTION 10. Said section 83 of said chapter 93, as so appearing, is hereby further amended by striking the last sentence and inserting in place thereof the following sentence:- A notice of assignment shall be in writing addressed to the consumer at the address shown on the contract, shall identify the contract and shall be sent to the consumer at least seven days prior to commencing billing.

SECTION 11. Section 84 of said chapter 93, as so appearing, is hereby amended by striking out the word “his” and inserting in place thereof the following words:- the seller’s

SECTION 12. Section 86 of said chapter 93, as so appearing, is hereby amended by striking out the word “his” and inserting in place thereof the following words:- the seller’s

SECTION 13. Section 87 of said chapter 93, as so appearing, is hereby amended by striking out the word “his” and inserting in place thereof the following words:- the seller’s