I got ripped off by a gym! (1 Viewer)

[Moe Maishlish]

I recently have become involved in a very upsetting situation with a "Fitness Institution" that's left me incredibly angry & frustrated.

Allow me to elaborate... (this is a long one!)

About 6 years ago, while still a student at York University in Toronto, I decided to join a gym and improve my quality of life. I chose a local gym (call them "X"), as I recalled their advertisements, and one of their branches was located nearby.

Upon consulting with the "X" membership representative, I explained that I was only interested in joining for a 4 month trial period, after which I would decide if I wanted to continue using their facilities. Having said that, the membership contract/agreement was then specifically modified and amended to state that my membership would only be valid for a period of only 4 months. I payed with a cheque, the amount of which came to 4 months worth of membership fees, and thereby became temporary 4 "X" Fitness member.

My line of thinking was to evaluate the fitness environment and conditions, and see if they were to my liking. If they met with my satisfaction, I would then choose to extend my membership beyond the 4 months I had signed-up for.

I attended the gym infrequently for the next 3 months, having decided fairly early into my 4-month membership that the facilities were definately *not* to my liking. I was upset at the fact that specific services that I had been promised were never acutally provided (including the fitness assessment), and appalled at the general lack of hygene in their facilities. Such hygenic issues included changerooms that were carpeted, consistently dirty, and smelled of foul odors (the origins of which I dared not attempt to identify). Having said that, I proceeded to write a letter of protest addressed to "X", in which I stated that I was not satisfied with their services, unhappy with their exercising environment, and appalled with their unhygenic conditions. I then indicated that I would not be extending my membership with "X" past the 4 month contract period, and would seek membership with a different fitness institution. I hand-delivered the letter to a member of the management staff and ended my relationship with "X" Fitness. Or so I thought...

Fast forward to June 2002. I had recently set-up a service with my bank whereby I would be mailed detailed monthly bank-statements, which would account for every transaction during that month. One evening, upon examining my May 2002 statement, one specific transaction catches my eye:

"Preauthorized debit - 'Y' Fitness Inc. - $35.91".

Checking my March & April statements verified that previous withdrawals for the same amounts had also been made. I was now looking at a minimum of three Preauthorized Payments that I did not authorize, to a Fitness Institution with whom I was never a member!

The next day I contacted the head-office of "Y" Fitness to discuss the unauthorized monthly debits. I placed several calls to head-office, after which I'm finally connected with the Mr. "Y", the "Y" Fitness employee responsible for membship issues.

I recounted my situation to Mr. "Y", and he explained that the "X" Fitness club with whom I had been a member had been taken-over by "Y" Fitness. After the takeover, "Y" Fitness proceeded to assume the "X" membership roster. It also turns out that my membership somehow remained active, despite my 4 month contract, and letter of protest & cancellation. As a result of my active account status, "X" & "Y" continued to charge my account for a period of 6 years (between 1996 & 2002), the total withdrawls totalling something between $2000 & $3000.

I explained to Mr. "Y" that I had originally paid by cheque (having never supplied any bank-account information), that the "X" membership was only for 4 months, and that the membership had been cancelled. I also explained that the money was being taken out without my consent or autorization. Mr. "Y" then assured me that, based on our conversation, he would "cancel" my membership immediately. I then asked Mr. "Y" to provide me with the authorization by which "Y" Fitness had accessed my account. He could not, nor could he produce any contract (my original with "X", or otherwise), or my written letter of protest/cancellation notice. I indicated that I no longer had a copy the original contract from 1996, and he indicated he would "order all my information from head office", and would call me when they arrived.

After waiting a few days to be contacted by Mr. "Y", I lost patience and contacted him once again. He informed me that they could not find my information, and could only produce my membership information in their computer system. He then claimed that, in order to return my money, I would need to provide "Y" Fitness with a copy of the original cancellation notice. I stated that they should have a copy of the notice with my contract, both of which they could not produce!

Mr. "Y" did mention that, after speaking with his superiors, he was authorized to grant me credit for the amount spent at the gym, but would not issue a full refund. I explained to him that I was already a satisfied member of another club, and would not accept his offer. Instead, I argued that they should provide proof that I was a member (i.e. a contract), as well as any authority granted to them to access my account (i.e. a Void Cheque). This however proved to be futile, as he claimed no responsibility, ending the conversation with the words "well, you'll just have to take us to court!".

At this point I was LIVID! Money was being withdrawn from my account without my permission, knowledge, or authorization. In the 6 years in which this had been happening, I had never recieved a single communication from either "X" or "Y" indicating that I might still be a member of their clubs. "Y" could produce no evidence that I was a member of their organization (no contract), nor could they produce any authorization to access my bank account. I later occurred to me that they may have recorded the account information from the bottom of the original cheque that I had written.

Before continuing, I'd like to mention that, in the past, I did not make a habit of examining my account-transactions in detail. I do not authorize anyone access to my account (except my employer, who only deposits money), specifically to avoid situations in which my account might be improperly accessed or tampered with. I use my credit card, should I choose to pay for something on a monthly basis. Having said that, I would not expect to find some organization withdrawing money from my account, as I never grant anyone access to my account! It's partly for this reason that I did not notice these transactions that had been taking place.

My next course of action was to contact my bank and see what they could do to reverse the charges. Unfortuantely, they were of little help, and could only refund they payments of the previous 2 months. They were also unable to provide me with any information as to how "Y" had obtained my bank account number, or who had authorized the access. My home branch bank-manager went so far as to call Mr. "Y" and see what she could do about obtaining a refund, but unfortunately got the same response that I did. The bank did however place a "stop-payment" on my account, thereby blocking any future payments to the gym.

After weeks of dealing with bank representatives, I was finally provided with the information for the bank-branch from which the payment-requests were originating. I placed a call to this branch and spoke with the bank-manager. She explained to me that they did not hold any records, and could not provide me with the information that I required. She proceeded to explain that the bank provides their customers with a service that allows them to supply the bank with account numbers, and amounts to withdraw from those accounts. No security-measures are put in place to insure that such account-access has been granted. In essence, a customer could access whatever account they wanted, no questions asked.

To top it all off, I got my July statement last week, and found that "Y" Fitness had attempted to withdraw YET ANOTHER payment from my account. This occured despite Mr. "Y"'s previous statement that he was cancelling my account. Thankfully, the stop-payment prevented the withdrawl, and the payment was denied.

So at this point, I'm gathering information and examining my options. It looks like the only way I can get my money back is if I take the case to small claims court. I've spoken with several people who have had similar situations with their gyms, and I'm wondering how this kind of thing can happen, and if there's any other recourse.

Has anyone here had any similar experiences? Is there something else I might be able to do to get my money back?

Moe.

 

[Bill Catherall]

Their only possible defense would be to produce a signed membership contract. You don't have to prove you aren't a member...they have to prove you are. If they can't do that, and you can show bank statements of all the payments made, then I'd say you have a strong case against them for small claims court.

 

[Jeff Ulmer]

I would be taking this up with the bank that authorized the transactions, since they are the ones responsible for maintaining the security on your account. If they can't provide written authorisation, you have a pretty good case against them, and I would be threatening legal action and going to the press about it if they aren't being helpful. Let them worry about collecting from the gym.

You'll have a hard time arguing this happening over 6 years though, even if you weren't at fault. The gym could argue that by not contesting the withdrawals you were agreeing to them, and so could the bank.

I'm not a gym guy, but I did do some work for one once, and found it to be a pretty shady business. They racked up hundreds in bills then disappeared, taking their client's payments with them.

 

[Moe Maishlish]

Jeff,
I've taken the issue to both banks, and they've basically washed their hands of the entire situation.
According to them, all they do is "hold the accounts". They claim that it's not their reponsibility to verify that access has been granted. This was a SERIOUS issue for me, and I argued it with them for quite some time. In the end, they refused responsibility, although they did refund me 2 months worth of payments.
My gripe was that, as a bank, they should not just let anyone who comes across an account number into a bank account. There has to be some kind of proof that the number was actually GIVEN to the person (as opposed to stolen). I would appear that the banks don't institute this kind of security, and just let anyone in.
The banks argument is that it's the customers responsibility to monitor their account. My argument was that no unauthorized acceses should be permitted (i.e. don't just let people access accounts without verifying that it's legit!), such that the customer should not be required to monitor their account!
Moe.

 

[Jeff Ulmer]

I wouldn't let the banks get off that easily. They may be able to try to absolve themselves like they have, but if I were you I'd apply a lot more pressure on them, and indicate that if they don't take action, that you will make sure everyone knows what goes on at their bank. It is utter BS to say that they don't have to check that people have permission to access your account. I think a lawyer might tell you differently.


Probably the first thing I'd do is go to the local paper, and even the local TV station, they would both love this type of story. You might also consider taking the matter up with the police, since if someone is accessing your account without permission it could be considered fraud.

I'd also publish the name of the banks and branches online. This kind of publicity is not what they are looking for, and I can safely bet that when one of these branch manager's superiors finds out that someone is making noises about people breaching the bank's security, something will be done and fast, to shut you up.

While six years is an awfully long time for this to go unnoticed, I think the press would have a field day with a story like this. I would be unrelenting if I were you.

 

[Dave E H]

I don't understand why this isn't criminal behavior? If they don't have a contract and were taking money from you, why isn't this theft? Thus, isn't it a criminal, rather than a civil matter?

 

[Brian Perry]

I would say firm Y has done nothing wrong. They assumed that the membership list and banking instructions from firm X were still legit, and it would be reasonable to expect a person to check his bank statement more frequently than every six years.

Firm X, however, is(was) clearly fraudulent. If in fact, firm Y is basically the same firm as firm X (but just renamed due to a bankruptcy or similar restructuring common to health clubs) then I would say go after both of them.

 

[Bill Catherall]

You can't really blame the bank. It's our responsibility to monitor the activity on our accounts. They realize that it's easy for fraud to occur so most banks have a policy that they will refund any disputed charges back 60 days. They did that for you...you can't take it up with them any further.

 

[Todd Hochard]

Clearly, they're doing you wrong, but I have to ask-
How do "miss" $35.91 being deducted from your checking, every month, for the past six years??? I know you said you don't look at your financial records in detail (even though, you should), but c'mon! You've heard the saying "Fool me once, shame on you. Fool me twice, shame on me." You've been fooled 72 times!
This is one of the many reasons that Quicken is so very useful.
I've had friends with Bally memberships that had this happen. Oops, did I say that out loud?
Again, clearly "X+Y" are in the wrong here, but, IMO, you are not without fault (or more correctly, indifference, I suppose), either. Making it all about "the man" loses the personal responsibility aspect of it. Just my opinion.
Good luck at getting your money back.
Todd

 

[Moe Maishlish]

I'll agree with the fact that I should have been checking my statements more often than I had been... I can assure you that I'll be checking them in detail from now on though.
I've always gone through my credit-card bills in detail, as I would expect that something like this might happen. In fact, at one point my card number WAS stolen, and VISA was kind enough to catch it and issue me a new card free of the fraudulent charges.
But the fact remains that I never granted either firm access to my account, so I didn't expect that they would be withdrawing money from my account. I don't expect the National Russian Ballet of Switzerland to access my account, so I never look for it.
Even though the charges go back 6 years, the point is none of them were granted, and they should all be refunded. The way I see it, the issue is not when the the withdrawals were made, but the fact that they were made in the first place.
I can understand that we as account holders bear some responsibility in monitoring our accounts. But the banks themselves hold our accounts, and should place some measures of security to make sure that such pre-authorized payments are in fact pre-authorized by the account holder themselves. I'm suprised and relatively worried that banks will blindly accept account numbers from such organizations without checking that they were obtained legitimately.
If the pre-authorzied policy for banks were to be amended so that the customer would be required to show proof of the ligitimate account-number (i.e. a photo-copy of a Void Cheque issues by the account-holder), then I would say that such a policy would be acceptable. That way, at least banks would have proof and a record that they are in fact participating in legitimate transactions, as opposed to aiding fraudulent business practices. For either firm to simply phone in/submit an account number without such proof is pretty irresponsible.
Keep in mind that these are banks. They hold our money. They are not institutions to be taken lightly. I'd like to have the peace of mind to know that when I deposit money, it's being held safe and securely, without the need for my interference.
I'll be contacting a member of the media shortly to inform them of what's transpired. I'm sure that the banks won't be very pleased when their customers hear about this policy.
Moe.

 

[Dave E H]

To me, this seems blatantly criminal - why don't you go do the police? It seems that they were basically stealing money from you. Don't THEY have to show they were authorized to take moeny from you? If they can't, aren't they _STEALING_ money from you (hence, a criminal offense?)

 

[Brian Mansure]

Moe,
I would first like to say that I'm truly sorry to hear about this situation your in. I wish you great luck on getting this taken care of.

I don't know what the Canadian equivalent of a U.S. State Attorney General's office would be but I'd try to file a complaint with such an office. Maybe contact the BBB and see if either company has had similar complaints because your probably not the first person taken advantage of by them and most likely will not be the last.
Possibly the Department of Justice could help you out.
I don't know but your probably going to have a tough time without some type of law enforcement agency or attorney in reclaiming your money. Basically try to get as much outside "backing" as you can and most likely you will have to go to court to resolve this issue. Keep in mind if Canadian and U.S. judicial systems are similar in regards to suing someone, the burden of proof may actually be on you (the plaintiff) so the more "ammunition" you have the more likely you'll win in court.
Again good luck with this.
Please keep us posted with major developments.

Brian

 

[Dave E H]

Also, if you can find other people this happened to - perhaps via flyers, an ad in the local paper, etc - then you might have a class action lawsuit here. Also, it would raise the stakes in any criminal investigation, if you can find others that this happened to as well.

 

[Andy Hardin]

I think you are going to have a hard time getting anything from the bank. In the end, they did nothing wrong. Many organizations perform *many* automatic withdrawals from bank accounts all of the time.

In the end, it is *your* responisibility to monitor your own personal finances to be sure that this does not happen. The bank cannot babysit you. Can you imagine what would happen if banks had to manually validate each of the millions of automatic payments, debits, and ACH's that occur.

They are refunding you for the past 60 days even though it is no fault of their own. I believe that is more than enough time to catch any fraudulent activity. They should not be on the hook for your $3000 because you did not look at the statment they provided to you. It is a federal law that the bank provide your statement at least quartetly, monthly if there is activity. I believe that they have a heck of an arguement against you. They provide you with it, it is your job as a responsible adult to veryify your finances because as we all learned as a kid, there are "bad people" out there that do bad things.

In the end, you are getting screwed by this gym. The "blame it on someone esle" mentality I think is weak. You had over 72 chances to catch it, you never did. Now you want someone to pay. Good luck.

 

[Ryan Wright]

They should not be on the hook for your $3000 because you did not look at the statment they provided to you.

Yes, they should be. They had no authorization to access that account. Period. It doesn't matter that he wasn't checking his statements, what they did is illegal. You can't simply dip into someone's checking account without written authorization. I have my mortgage deducted from my account and had to mail them an actual form with an actual signature. They wouldn't take verbal authorization over the phone nor would they let me fax it. They needed an actual copy of my signature.

Moe, you can't use small claims court. The statute of limitations for small claims has long expired on most of this. I'm pretty sure you only get a year on this. You obviously know you made a huge mistake by not checking your statements for so long, so I won't hammer that point into you any further.

You can, however, sue with a traditional lawyer, and that's exactly what I'd do. Sue both the gym and any and all banks that were involved in these transactions. I wouldn't be surprised if you were limited on the amount of money you can get from the banks, but I do know that they have an obligation of more than the 2 months they claimed they'd credit you for! Find out what your rights are and what the law says. A lawyer can help you do this.

If all else fails, or if a lawyer is too expensive, take it to small claims. You can at least get the last year out of them that way. The small claims process is quick & easy. I've been through it and it's a cake walk. The problem, of course, is collecting the money, but since this place actually has a building, you'll be fine. You can place a lien on it with ease if they don't pay. (The guy who I sued in small claims court disappeared and owns no real estate around here, so I can't do a thing unless I hire a P.I. to track him down and find out where he works. Then I can garnish his wages, but he only owes me $500 and tracking him down would take most of that money. So I'm just hanging onto the paperwork, I figure he will turn up eventually.)

Good luck.

 

[Moe Maishlish]

In the end, you are getting screwed by this gym. The "blame it on someone esle" mentality I think is weak. You had over 72 chances to catch it, you never did. Now you want someone to pay. Good luck.

Yup - I am getting screwed by the gym. And they manipulated a what I consider to be a flawed banking system to administer the screwing. Someone found a pretty glaring loophole, and took advantage of it!
I would expect the gym to pay the money back. Whether or not I get the money directly from the gym, or from the bank (who I expect would then seek compensation from the gym) is the question right now.
Moe.

 

[Brian Perry]

they let someone in without any proof of authorization!

As Andy said, there are MILLIONS of automated debits performed each day. Banks are given debit instructions in a variety of ways, and it is not their job to authenticate them all. The burden is on the customer to check his statement.

I currently have my electric bill, gas bill, phone bill, satellite bill, and others debited from my checking account. Did I sign a form to initiate the debits? Probably. But I don't expect the bank to verify that it was actually my signature on the form. How would they ever be able to do that?

 

[Bill Catherall]

It's impossible for a bank to authenticate every transaction. The only way to do true authentication is with retinal scans or finger print ID. Signatures can be forged. PINs can be hacked. All current authentication methods aren't secure enough, and pure authentication would create so much red tape as to make it virtually impossible to perform any phone or internet transactions. You're asking way too much and won't like the outcome if it happens. If you don't like it, stop using banks.

 

[Ryan Wright]

But I don't expect the bank to verify that it was actually my signature on the form. How would they ever be able to do that?

Good point, and very accurate, however: The bank still has a responsibility to stop fraud. When alerted to it, as this bank has been, they need to make things right. Reimbursing only two month's worth is bullshit. Even credit cards give you at least ninety days to contest a charge.

 

[Todd Hochard]

They had no authorization to access that account. Period.

Given that Moe doesn't have the original contract, and he did write them a check (or gave them a voided check), I'm not sure that can be said.
Those health clubs are VERY sneaky re: collection. They probably had one of those "used car disclaimer" guys mumbling in the background as you were signing the original 4 month deal.
I, too, have lots of preauthorizations to my checking. In each case, I recall providing Routing info and account number, signing the form, that then went to the people deducting the money, NOT THE BANK. I'm not sure how it's validated, by I can tell you that the piece of paper I signed didn't get back to the bank.
If you want this level of security (which I think is unnecessary), I'd expect to pay $20-50 per month in service fees, for the bank to provide it.
Todd