The Scenario
A consumer signs up for a 12-month gym membership. The contract contains an automatic renewal clause in small print that converts the membership to a month-to-month plan at a higher rate at the end of the term. After 14 months, the consumer attempts to cancel and is told that 90 days notice is required and that an early termination fee applies.
Rights Analysis
Gym memberships are 'personal development services' under Part IV of the Consumer Protection Act, 2002. A 10-day cooling-off period applies at the start of the initial contract. The Act restricts the maximum initial term (one year) and prescribes specific disclosure requirements for renewals.
An automatic renewal clause is subject to the disclosure requirements of the CPA. Where the renewal is not clearly disclosed or the consumer is not given a meaningful opportunity to opt out, the renewal may be voidable. An early termination fee that exceeds the prescribed maximum is unenforceable.
Possible Options for the Consumer
A written cancellation notice should be sent to the gym, referencing the CPA personal development services provisions. The notice should dispute any early termination fee that exceeds the statutory maximum and challenge any renewal that was not properly disclosed.
Where the gym continues to bill, a credit card chargeback under CPA s. 99 may be available. A complaint may also be filed with Consumer Protection Ontario. Documentation of the original contract, any renewal notices, and all cancellation correspondence supports the claim.