A crackdown on so-called “subscription traps” is circling the gym industry worldwide, forcing operators to reconsider their sign-up and cancellation practices
Breaking up is hard to do, and when it comes to gym memberships, it can also mean paperwork, face-to-face negotiations, fees and a complicated exit.
Australia is now the latest case in a growing global debate, with its gym industry pushing back against proposed government reforms that, like similar efforts in the U.S. and U.K., target “subscription traps,” business practices that make it far easier to sign up than to exit.
In Australia, proposed changes to consumer protection laws would make it easier for members to cancel gym memberships and exit long-term contracts, prompting pushback from the fitness industry.
As reported by The Sydney Morning Herald, gym operators and industry groups, including AUSactive, which represents Anytime Fitness, Snap and Fitness First, argue that reforms designed with online platforms in mind, such as Netflix, risk being applied too broadly to brick-and-mortar businesses like gyms, which tend to have costs tied to rent and staffing.
AUSactive chief executive Ken Griffin told the publication that laws making it easier for consumers to cancel gym memberships run counter to the industry’s business model, which relies on revenue certainty driven by longer-term commitments and discounted rates.
“If someone gets a deal, say for 12 months at a discounted rate, they gave that certainty to the owner of a gym, and the owner can bank on that income, so they can have the certainty to employ a requisite number of staff,” Griffin said.
Still, consumer advocates counter that those dynamics don’t justify opaque contracts or burdensome cancellation requirements.
Some smaller operators, however, have explored shorter-term memberships and made it easier for members to cancel longer-term contracts, citing evidence that former members are more likely to return after experiencing a simpler exit process.
Australia is expected to head into a final consultation period ahead of legislation next year.
In the US, Regulation Is in Flux
In the U.S., efforts to make gym memberships easier to cancel have followed a more uneven path, with enough twists to keep both consumers and operators guessing.
Earlier this year, a federal appeals court struck down the Federal Trade Commission’s proposed “click-to-cancel” rule, which would have required businesses, including gyms, to make it as easy for consumers to cancel a subscription as it was to sign up.
The rule was set to take effect in July before the U.S. Court of Appeals for the Eighth Circuit vacated it, citing procedural deficiencies. The Health & Fitness Association, the leading trade group for the U.S. fitness industry, called the ruling “a major victory” and said it was the result of sustained advocacy, including formal comments, an amicus brief and coordinated efforts with business groups and lawmakers.
Still, the court decision has not halted broader momentum around gym cancellation practices.
Fitness International LLC, the parent company of LA Fitness, was sued by the FTC this past summer over allegations that it made gym memberships difficult to cancel. Fitness International has since asked a California federal judge to dismiss the case, arguing the law cited by the FTC applies only to online commerce, not brick-and-mortar businesses.
States have also stepped in with their own enforcement actions.
In May, New York Attorney General Letitia James announced a $600,000 settlement with Equinox Group over alleged unfair membership cancellation practices. According to the attorney general’s office, the company failed to provide accessible online cancellation options, among other violations.
“New Yorkers should be able to cancel a membership they no longer use or want without breaking a sweat,” James said at the time.
Cancellations Are Growing
Although the rule has faced several challenges, many fitness operators have moved ahead with more transparent cancellation policies, often aligning with existing or emerging state-level requirements. And now, early data is beginning to show how those shifts are playing out.
According to recent data from ABC Fitness, gym check-ins rose 1% year over year but cancellations have climbed 8%, suggesting that even as engagement deepens for some members, others are exiting just as quickly.
UK Gyms Face Similar Scrutiny
Across the pond in the U.K., regulators are also stepping up scrutiny of gym membership practices.
The Competition and Markets Authority (CMA), the country’s competition and consumer watchdog, is investigating Gold’s Gym UK over concerns that it may have breached consumer protection rules related to pricing transparency.
The CMA has raised questions about whether mandatory fees, including a joiner’s fee introduced during the sign-up process, were clearly included in the upfront price presented to consumers when purchasing a membership. Regulators are examining whether those additional charges were sufficiently disclosed at the outset or only surfaced later in the transaction.
“At a time when household budgets are under constant pressure and we’re all hunting for the best deal possible, it’s crucial that people are able to shop online with confidence, knowing that the price they see is the price they’ll pay,” CMA Chief Executive Sarah Cardell said.
The investigation does not automatically mean Gold’s Gym UK, which operates four locations across London and Essex, has violated consumer law. However, if the CMA determines that rules were breached, it has the authority to require payouts to affected customers and penalties of up to 10% of the company’s global turnover.
