BILL ANALYSIS Ó
AB 2810
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CONCURRENCE IN SENATE AMENDMENTS
AB
2810 (Eggman)
As Amended June 30, 2016
Majority vote
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|ASSEMBLY: |76-0 |(May 2, 2016) |SENATE: | 37-0 |(August 11, |
| | | | | |2016) |
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Original Committee Reference: B. & P.
SUMMARY: This bill specifies that a contract for health studio
services may be canceled by the buyer in person, via email from
an email address on file with the health studio, or via
first-class mail, and makes other conforming changes.
The Senate amendments:
1)Allow a health studio services contract to be delivered by
email instead of in writing.
2)Clarify that the contract must disclose the initial or minimum
length of the term of the contract and that, if in electronic
format, the statement must be equally legible to 14-point
type.
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3)Require the contract to state where the description of
services, facilities, and hours of access that the consumer is
entitled to is available on the health studio operator's Web
site and would provide that any services, facilities, and
hours of access that are not described in the contract or on
the website are to be considered optional services and as
separate contracts, as specified.
4)Make other conforming changes.
FISCAL EFFECT: None.
COMMENTS:
Purpose. This bill is sponsored by the author. According to
the author, the "process of sending a cancellation letter via
certified mail is time consuming and inconvenient and creates a
hardship for gym members, which causes them-in some cases-to
continue in memberships they have idled, and pay for access to
services they are not using. The confusion caused by this
complicated requirement and the lack of options for recourse
results in considerable frustration, unnecessary expense, and
forces gym members to go through onerous steps in order to
simply cancel a membership. [This bill] will free fitness club
members from having to navigate a complicated, time consuming
process by giving them the choice to cancel their membership
contracts in person or via first-class mail."
Background. California contract law provides protections for
consumers of certain services, such as health studio and gym
services and dance studio lessons. Specifically, the purpose of
the protections as they relate to health studio and gyms "is to
safeguard the public against fraud, deceit, and financial
hardship, and to foster and encourage fair dealing, and
prosperity in the field of health studio services by prohibiting
or restricting false or misleading advertising, onerous contract
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terms, harmful financial practices, and other unfair, dishonest,
deceptive, destructive, unscrupulous, fraudulent, and
discriminatory practices by which the public has been injured in
connection with contracts for health studio services" (Civil
Code Section (CIV) 1812.80).
For instance, existing law specifies the maximum lengths of
health studio contracts, specifies the maximum payments allowed,
and limits a health studio's ability to force buyers to sign
waivers and indemnity clauses. It also provides buyers with
treble damages (three times the amount of actual damages awarded
to a buyer) and attorney fees when health studios violate the
contract requirements.
Cancellation of Gym Memberships. One of the current consumer
protection issues is related to a health club's ability to
automatically charge a consumer's credit card or bank account
through an electronic funds transfer (EFT). While existing law
provides various timelines for canceling a health studio
contract, it is unclear on the methods a consumer may use to
cancel a contract.
Specifically, CIV 1812.85(b)(1) requires all contracts for
health studio services to contain the following statement: "You,
the buyer, may cancel this agreement at any time prior to
midnight of the fifth business day of the health studio after
the date of this agreement, excluding Sundays and holidays. To
cancel this agreement, mail or deliver a signed and dated
notice, or send a telegram which states that you, the buyer, are
canceling this agreement, or words of similar effect."
Because the law specifically notes mail and telegram, many
health studios and gyms do not allow members to cancel over the
phone or via email. This can be burdensome for consumers, as
some may try to cancel over the phone or through email, not
realizing the contract specifies they may only cancel through
mail. This may result in miscommunication between consumers and
health studios. For instance, there may be situations where the
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consumer believes the contract is canceled but the health studio
continues to debit the account on file.
Analysis Prepared by:
Vincent Chee / B. & P. / (916) 319-3301 FN:
0003671