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Tuesday
Oct242017

Clubs Caught in the Crossfire: IHRSA Thwarts States Seeking to Restrict Automatic Renewal Contracts

As IHRSA predicted, state legislatures were very active this year and passed a high volume of bills. In 2017, our team saw a rise in the number of bills seeking to place restrictions on automatic renewal of membership contracts. The good news is the majority of bills are not aimed at clubs specifically. The bad news is these bills are broadly written and clubs get pulled in as a result. Fortunately, IHRSA has enjoyed success in 2017, beating back these proposals and securing victories for health clubs in the following states:  

Minnesota

Following a request by IHRSA’s advocacy team, the Minnesota legislature rejected a proposal temporarily inserted into House File 676 that would have required businesses to send stand-alone automatic renewal notification mailings to consumers. Unfortunately, similar proposals are pending in the legislature, and are eligible for consideration when the legislature reconvenes in 2018.

Wyoming

House Bill 227, legislation proposing regulation of automatically renewing contracts, did not advance into law. IHRSA submitted testimony opposing the bill to key leaders in the Senate, who opted not to consider the House proposal. If passed, the bill would have required clubs offering certain contracts to provide written or electronic notification of contract renewal between 30-90 days prior to the cancellation deadline.

Alabama

House Bill 405 would have required health clubs and other businesses to send written notification to consumers between 30-60 days before contract renewal, provided that the original contract lasted 12 months and was renewing for a specified period of more than one month. The notification would specify the methods by which a consumer may obtain details of the automatic renewal provisions and cancellation procedure. In addition, the bill would have required clubs to disclose automatic renewal terms in the contract. After the bill’s introduction, IHRSA contacted the sponsor and expressed interest in the legislation, which did not receive a committee hearing or advance into law.

Virginia

House Bill 2430 would have prohibited a business from charging a consumer for an automatically renewing contract unless the business first obtained affirmative consent from the consumer, among other restrictions. After the bill’s introduction, IHRSA contacted the sponsor, who agreed to exempt health clubs on the basis that the Virginia Health Club Act already regulates renewal of contracts for health club services. The sponsor re-drafted the bill to exclude health clubs ahead of a committee vote, and ultimately, the committee voted not to advance the legislation.

Even though these threats have been neutralized, it is common for harmful policy proposals to spread across state lines. IHRSA will continue to monitor proposals that could hurt clubs in D.C., New York, and Vermont and will continue to protect all club businesses from harm in the coming year.

If you have specific questions or want more information on how you can get involved in IHRSA’s advocacy efforts, contact the public policy team.

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