Consumer complaints against the Physical Gym chain in Hong Kong have surged, totalling over HK$110 million (US$14 million), following the arrest of two directors.
The Consumer Council said it had logged 3,289 complaints from customers as of Thursday evening, with claims totalling more than HK$113 million. The average amount in each claim was HK$34,430.
Meanwhile, the number of related complaints filed with the Customs and Excise Department had jumped to 1,492 as of 4pm, up by 65 per cent from 900 on Wednesday, with claims nearly doubling from HK$39 million to HK$72 million.
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The biggest case received by the consumer watchdog involved a prepayment of HK$1.86 million for more than 1,900 private classes and a 10-year membership.
“Sometimes customers bought more classes than they needed and did not use up their packages before the expiry period,” Consumer Council chief executive Gilly Wong Fung-han told a radio programme. “Trainers told customers their unused credits would only remain valid if they bought extra classes. That is how things snowballed.”
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Wong said customers might have considered the “uncertainties” of signing and renewing long-term packages. Changes to their health could prevent them from going to the gym, while service providers might not remain viable over the 10 to 30 years covered by the agreements, she explained.
Superintendent Rachel Fong Kwun-ting of customs’ intellectual property investigation bureau said authorities had separated figures for prepayment of fitness and beauty services.
“We have to contact complainants one by one to inquire about the details of their contracts. Some were not even sure how much they had paid,” she told another radio show.
She added customs had been in touch with more than 500 clients so far, with a focus on members who had joined the gym chain only earlier this month.
Customs and police officers were seen visiting the Causeway Bay and Wan Chai branches in the afternoon, inspecting and confiscating documents.
The investigation would centre on whether the gym chain had violated the Trade Descriptions Ordinance by accepting payments while knowing it would not be able to render services.
Under the ordinance, which is enforced by customs, business owners can be charged for wrongly accepting payment if they have no intention or ability to provide services that have been paid for. Offenders face up to five years in prison and a HK$500,000 fine.
The superintendent said some cases provided strong evidence against the gym chain as they showed contracts were signed on September 5, just a day before the company announced its closure.
Fong reminded customers to “seriously consider” the implications before agreeing to make prepayments on long-term packages.
She also called on affected residents to ensure that they had a record of their transactions and receipts if they wanted to make claims for refunds.
Lawmaker Bill Tang Ka-piu said about 600 out of 740 former Physical staff had reported their cases to the Labour Department, even before the Mandatory Provident Fund Schemes Authority on Wednesday said it would file a civil claim against the chain in the High Court to recover outstanding payments.
The authority said Physical owed employees about HK$4.8 million for June to August.
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