FTC Passes ‘Click-to-Cancel’ Rule for Gyms; HFA Points to Key Concessions
While the new rule makes it easier for consumers to cancel gym memberships online or over the phone, fitness industry leaders say the requirements could’ve been worse if they hadn’t intervened
The Federal Trade Commission (FTC)’s new “click to cancel” rule will make it easier for consumers to cancel paid subscriptions like gym memberships, creating challenges for fitness businesses, although the industry’s biggest trade group says it’s not all bad news.
While the rule introduces new regulatory hurdles that will impact gyms, health clubs and other fitness businesses, the Health & Fitness Association (HFA) says the final version of the rule also contains beneficial language that eases some of the FTC’s originally intended requirements for gym operators.
“While the finalized rule reflects several of the concerns raised by HFA during the public comment period, marking a collaborative step forward, it remains a new regulatory hurdle that will impact the operations and growth of small businesses in our sector,” the HFA said in an email to members following the ruling.
Announced Wednesday, the click-to-cancel rule requires that businesses, including gyms, make it as easy for consumers to cancel subscriptions and memberships as it was for them to sign up for them in the first place.
According to the FTC, consumers who enter into subscription agreements online must be able to cancel them online in the same number of clicks.
For subscriptions that were entered into in-person, businesses must give consumers the option to either cancel online or over the phone.
Key Concessions for Fitness Operators
The rule also contains several provisions that make the subscription process more transparent for consumers, including enhanced content, disclosure and record-keeping requirements for businesses.
It’s here that HFA leaders say they were able to help secure important concessions in the rule’s language that ease some of the burdens on gyms, clubs and studios.
For example, the FTC dropped a proposed “annual reminder requirement” that would have required businesses to periodically inform consumers of the nature of their subscriptions.
According to the HFA, the rule also allows for “save attempts,” so long as those attempts don’t impede a consumer’s ability to cancel a membership. This means fitness facilities can still offer options like membership pauses, freezes or tier adjustments to dissuade members from canceling their memberships outright.
“The rule’s adjustments, such as the removal of annual reminder requirements for long-term memberships and the allowance for fitness facilities to engage in customer retention efforts during cancellation requests, are important acknowledgments of the unique operational needs of in-person health and fitness services,” the HFA said in its email. “However, the rule still introduces new burdens that will disproportionately affect small businesses within the industry.”
HFA Flexes Advocacy Muscles
Liz Clark, president and CEO of the Health & Fitness Association, said the ruling marks a “significant moment for the health and fitness industry, as we have successfully worked with the FTC to recognize the distinct differences between our facilities and digital subscription models.”
“Our recent successes are the result of a strategic shift in focus and unprecedented industry representation that we’ve never had before,” Clark added. “But while these changes mark real progress, the new rule still presents serious challenges for small operators, and we must remain vigilant in addressing these obstacles.”
The FTC originally proposed its click-to-cancel rule in March 2023, pointing to numerous complaints it had received from consumers about hurdles they faced in canceling subscriptions and memberships online or over the phone.
The HFA (then known as IHRSA) and other fitness industry leaders strongly opposed the rule, arguing it “fundamentally misunderstands” the business model of in-person fitness centers, which is different from online-only services.
HFA leaders argued that gyms shouldn’t be subject to the same cancellation requirements as apps, digital newspaper subscriptions and cable TV contracts, for example.
Most provisions in the FTC’s click-to-cancel rule will go into effect 180 days after its entered into the federal register, giving fitness businesses some time to plan for the new regulatory reality.