CityFitness Fined One Point One Two Million For Misleading Fees
Gym chain CityFitness has been ordered to pay a one point one two million dollar fine after admitting they misled customers about membership fees. The country's largest gym business advertised the cheapest memberships at six dollars ninety-nine cents a week, but then added a three percent compulsory transaction fee, attracting new members with a publicised cost that did not exist. This deliberate falsehood was created to boost company profits, according to the Commerce Commission.
The Commerce Commission stated that the three percent fee was not a transaction fee at all, but a way to increase the company's revenue. Deputy chair Anne Callinan made it clear that the message to businesses is simple: "Be honest with your customers." Auckland District Court Judge David Clark noted that these decisions were made at the highest levels of the company, demonstrating a disregard for potential members' rights in favour of commercial interests.
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Between December twenty-first, twenty twenty-three and April thirtieth, twenty twenty-five, CityFitness charged this compulsory fee to approximately one hundred and twenty-five thousand people. This generated the company an additional one point six million dollars in revenue. The gym chain pleaded guilty to eight charges under the Fair Trading Act, admitting to misleading conduct on its website, Instagram and Google advertising.
Judge David Clark stated that while businesses can protect themselves against rising costs, they must do so responsibly and in line with market practice and the Fair Trading Act. He found that CityFitness disregarded the rights and interests of potential members, creating a falsehood to prioritize its own commercial position over its legal obligations. The commission had sought a penalty between one point five million and two million dollars for the offending.
CityFitness chief operating officer Doug Hatten acknowledged the potential for confusion and confirmed the transaction fee was removed over a year ago. He stated the company's intention has always been to keep costs low and make fitness accessible and they accept that current pricing offers greater transparency. They apologised for any confusion and understand the importance of operating within the commission's guidelines.
The company's actions have resulted in a significant financial penalty, serving as a clear warning to other businesses about the importance of honest and transparent pricing. The Commerce Commission reiterated its commitment to upholding consumer rights and pursuing companies that mislead customers to gain an unfair advantage.
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