High Court bans gym firms' use of unfair contracts and practices

The Court issued the enforcement order against Ashbourne Services Management after previously ruling that the gym management firm had breached UK consumer protection laws. Ashbourne cannot use "certain unfair terms and business practices", under the terms of the order, according to the OFT.

To comply with the order Ashbourne has also had to write to more than 700 gym clubs it acts for "to inform them of the judgment and [Ashbourne's] responsibilities to comply with it," the OFT said.

Ashbourne is also prohibited from deploying certain measures for "collecting the arrears of consumers" that stop making payments, including reporting customers to credit reference agencies when they do not pay up, the OFT said.

The order follows on from a High Court ruling against Ashbourne in May. The Court had determined that the company was in breach of consumer protection laws, including the Unfair Terms in Consumer Contracts Regulations and the Consumer Protection from Unfair Trading Regulations.

The OFT had launched legal proceedings against the firm after receiving "a large number of complaints" from consumers who had been unable to cancel lengthy gym membership contracts Ashbourne had drawn up.

The Unfair Terms in Consumer Contracts Regulations sets out rules that businesses must comply with when drawing up contracts for customers. Amongst its findings the High Court had ruled that Ashbourne's contract terms breached the regulations by giving the company an unfair right to demand disproportionate cancellation fees.

The Consumer Protection from Unfair Trading Regulations set out rules to protect consumers from unfair, misleading or aggressive selling practices. Ashbourne's contracts contained terms that did not properly set out consumers' rights and demanded payments which were not due, the High Court said.

The Court had also found that Ashbourne was in breach of the regulations by  "reporting or threatening to report sums to credit references agencies where the sum owed was unfair, merely a claim for damages, otherwise not due or was disputed by the consumer", according to the OFT's summary of the case.

The OFT said it urged all gym clubs to review their contract terms following the issue of the enforcement order against Ashbourne.

"We are pleased that the enforcement order has been granted by the High Court, and urge gyms that use similar contracts that they should review their customer contracts for fairness," Cavendish Elithorn, senior director of the OFT Goods and Consumer Group, said in a statement.

"This judgment and order make clear that businesses cannot hide behind contract terms to engage in intrinsically unfair commercial practices. Gym companies should also be aware that trying to enforce illegal contract terms is a breach of the law and in certain circumstances they may have a duty to notify customers where their contract terms have been found to be illegal. This case sends a clear signal to traders that the OFT and local trading standards services will not hesitate to take action to protect consumers. Any consumer who feels that they have an unfair minimum term and wishes to end their contract should now feel able to challenge the terms with their gym," Elithorn said.