The gym chain made famous on NBC’s “Biggest Loser” is being sued for continuing to debit the bank accounts of customers who have canceled their memberships. The US Court of Appeals, Ninth Circuit, has given the green light to a class action lawsuit that says the chain is violating both the RICO Act and the Electronic Funds Transfer Act by keeping these zombie memberships active.
From the press release:
Friedman vs. 24 Hour Fitness USA, Inc., (Case # 06-06282), alleges that 24 Hour Fitness continues to deliberately take monthly payments out of consumer’s accounts after the member cancels membership. The case was filed in U.S. District Court, Central District of California.
The gym insists all members pay their monthly memberships by electronic transfer. It is estimated that 24 Hour Fitness is making $1.6 million a month that it is getting from former members’ bank and credit card accounts by defrauding such companies as Bank of America and J.P. Morgan Chase, which process payments via the national financial system networks for electronic fund transfers.
“24 Hour Fitness is the modern day Al Capone, using the electronic banking and credit card system as Al Capone and his mob used the Tommy gun,” says Los Angeles trial lawyer Robert L. Esensten of Wasserman Comden & Casselman. “This is exactly what the [Racketeer Influenced and Corrupt Organizations (RICO)] laws were designed to stop. Apparently 24 Hour Fitness’s annual revenues of over one billion dollars a year are not enough for its owners, despite the fact that today’s consumers are struggling to make every dollar count.”