📋 Overview

Your fitness business has received a demand letter alleging billing fraud or improper membership charges. California's Health Studio Services Contract Act (Civil Code 1812.80-1812.98) and Automatic Renewal Law impose strict requirements on gym membership billing. Understanding these laws is critical to mounting an effective defense.

⚠ Common Allegations

Unauthorized charges after cancellation, hidden fees, failure to honor cancellation requests, auto-renewal without consent.

🕒 Response Window

CLRA provides 30-day cure period before lawsuit. Respond quickly to preserve this opportunity to resolve.

💰 Class Action Risk

Billing practice claims often become class actions. Individual resolution can prevent broader exposure.

California Health Studio Services Contract Act Requirements

  • Written contract required - Must provide member with signed copy of membership agreement
  • 3-day cancellation right - Members can cancel within 3 business days of signing for full refund
  • Maximum contract term - Contracts cannot exceed 3 years
  • Relocation cancellation - Must allow cancellation if member moves 25+ miles from facility
  • Death/disability cancellation - Must cancel upon death or disability
  • Clear fee disclosure - All fees must be clearly disclosed in the contract

Our Pricing

  • 📄 Demand letter: Flat fee $450
  • ⏱ Extended negotiation: $240/hr
  • 📊 Contingency: 33-40% for strong claims
$450
Attorney Response on Letterhead

Complete compliance review, professional response letter, and recommendations for billing practice improvements.

Schedule Review

🔍 Evaluate the Claim

First, assess your billing practices against California requirements. Many gyms unknowingly violate the Health Studio Act or Automatic Renewal Law.

Billing Compliance Checklist

Requirement What Law Requires Common Violation
Written contract Signed agreement with all terms, copy provided to member No signed contract
Cancellation procedure Clear process disclosed in contract, honored when followed Ignoring requests
Auto-renewal disclosure Clear, conspicuous disclosure before initial charge Buried in fine print
Fee transparency All fees clearly listed in contract Hidden annual fees
Easy cancellation Online cancel if online signup (ARL requirement) In-person only

📄 Document Your Process

  • ✓Signed membership agreement
  • ✓Billing authorization form
  • ✓Payment processing records
  • ✓Auto-renewal disclosure copy

📝 Member Records

  • ✓This member's signed contract
  • ✓All billing transaction history
  • ✓Cancellation requests received
  • ✓Communication log with member

⚠ In-Person Cancellation Trap

If members signed up online but you require in-person cancellation, you likely violate California's Automatic Renewal Law. This is one of the most common gym compliance failures and creates significant liability exposure.

🛡 Your Defenses

If your billing practices comply with California law, several strong defenses are available.

Valid Written Contract

If you have a signed membership agreement that complies with the Health Studio Act, with clear billing terms and the member's signature, this establishes their consent to the charges.

When to use: You have a signed contract with all required disclosures and terms.

Proper Cancellation Procedure Available

If your cancellation process was clearly disclosed and reasonably accessible, but the member didn't follow it, you can defend continued billing as authorized under the contract.

When to use: Member didn't submit cancellation through documented procedure.

Auto-Renewal Properly Disclosed

If you provided clear, conspicuous auto-renewal disclosure at signup and in confirmation communications, the member consented to continued billing.

When to use: You can show auto-renewal terms were clearly presented and acknowledged.

Member Continued Using Facility

If check-in records show the member continued using the gym after the alleged unauthorized charges began, this demonstrates they received value and authorized the membership.

When to use: Access logs show continued facility usage during disputed period.

Timely Processing of Cancellation

If you processed the member's cancellation within the timeframe specified in your contract (typically 30 days notice), charges during that period were authorized.

When to use: You honored cancellation per contract terms, charges were for notice period.

🚨 Common Billing Practice Violations

  • Continuing to charge after receiving cancellation notice
  • Hidden annual "enhancement fees" not in original contract
  • Requiring certified mail or in-person cancellation for online signups
  • Charging during facility closure or service unavailability
  • Auto-renewing at higher rate without clear disclosure

⚖ Response Options

Based on your compliance assessment, choose the appropriate response strategy.

Refund & Improve Practices

If compliance gaps exist, refund this member and immediately fix your billing practices. This prevents class action exposure and regulatory complaints.

  • Resolves individual claim
  • Prevents CLRA lawsuit
  • Reduces class action risk

Dispute with Documentation

If fully compliant, respond with detailed documentation: signed contract, billing authorization, proper disclosures, and cancellation procedure records.

  • Appropriate if compliant
  • Creates defense record
  • May deter further claims

Partial Refund Settlement

Offer to refund charges after their claimed cancellation attempt while maintaining earlier charges were valid. Get release of all claims in exchange.

  • Good faith gesture
  • Limits exposure
  • Obtains release

Mediation

For larger disputed amounts or when facts are contested, propose mediation to resolve without litigation risk.

  • Neutral resolution
  • Avoids court costs
  • Preserves relationship

📊 Exposure Analysis

Calculate your risk before deciding response strategy

Individual member refund claim$200-2,000
CLRA statutory damages (per violation)$1,000+
Attorney's fees if member prevails$5,000-15,000
Class action exposure (similar claims)$100,000+
Cost to fix billing compliance$2,000-10,000
INDIVIDUAL REFUND vs. LITIGATION$500 vs. $50,000+

💡 CLRA Cure Period

The Consumer Legal Remedies Act requires consumers to give you 30 days to "cure" violations before filing suit. Use this window to resolve the claim and fix any compliance issues. A proper cure can eliminate their right to sue for damages.

📝 Sample Responses

Customize these response templates for your situation.

Granting Full Refund - Compliance Uncertain
Dear [MEMBER NAME], Thank you for bringing your billing concerns to our attention regarding your membership at [GYM NAME]. We have reviewed your account and, in the interest of member satisfaction, we are processing a full refund of [$AMOUNT] for charges dating from [DATE] to present. This refund will appear on your payment method within 7-10 business days. Your membership has been canceled effective immediately. You will not receive any future charges. We apologize for any confusion regarding our billing practices and have taken steps to improve our cancellation and billing processes to prevent similar issues. If you have any questions, please contact us at [PHONE/EMAIL]. Sincerely, [GYM MANAGER NAME]
Denying Claim - Valid Contract & Billing
Dear [MEMBER NAME], We have reviewed your demand letter dated [DATE] regarding your membership billing at [GYM NAME]. Our records indicate the following: 1. You signed a membership agreement on [DATE] that clearly disclosed the monthly dues of [$AMOUNT] and auto-renewal terms. 2. You acknowledged and consented to automatic billing by signing the payment authorization form and checking the auto-renewal acknowledgment box. 3. You received a confirmation email on [DATE] detailing your membership terms, billing schedule, and cancellation procedure (copy attached). 4. Our records show no cancellation request from you prior to [DATE]. Our cancellation policy, which you agreed to, requires [DESCRIBE PROCESS]. 5. Check-in records show you accessed the facility [X] times between [DATES], confirming your continued use of membership benefits. Based on these records, all charges to your account were authorized under your membership agreement and California law. We respectfully decline your refund request. Your membership has been canceled effective [DATE] per your recent request. No further charges will occur. Sincerely, [GYM MANAGER NAME]
Partial Refund - Good Faith Settlement
Dear [MEMBER NAME], Thank you for contacting us regarding your membership billing concerns. While our records show you signed a valid membership agreement with clear billing terms, we understand there may have been confusion regarding our cancellation process. In the spirit of good faith resolution, we offer the following: 1. Refund of [$AMOUNT] representing charges from [DATE] forward 2. Immediate cancellation of your membership with no further charges 3. Waiver of any outstanding balance on your account This represents [X] months of membership fees and demonstrates our commitment to fair treatment of members. We believe charges prior to [DATE] were valid as you were actively using the facility during that period. If you accept this resolution, please sign the enclosed release and return it within 14 days. Upon receipt, we will process your refund immediately. Sincerely, [GYM MANAGER NAME]
Response to Attorney Demand Letter
Dear [ATTORNEY NAME], We acknowledge receipt of your letter dated [DATE] on behalf of [MEMBER NAME] regarding membership billing at [GYM NAME]. We take compliance with California's Health Studio Services Contract Act and consumer protection laws seriously and have reviewed your client's account and our billing practices. Without admitting any violation or liability, we are prepared to resolve your client's claim as follows: - Full refund of disputed charges: [$AMOUNT] - Cancellation of membership and deletion of payment information - No admission of wrongdoing This offer is contingent upon execution of a mutual release of all claims, including any class or representative claims, by your client. We have attached a proposed release for your review. Please respond within 14 days to confirm whether your client wishes to resolve this matter. If we cannot reach resolution, we are prepared to defend our billing practices, which we believe comply with all applicable laws. Sincerely, [GYM LEGAL REPRESENTATIVE]

🚀 Next Steps

Immediate actions to take after receiving a billing fraud claim.

Step 1: Preserve Records

Pull this member's complete file: contract, billing history, communications, check-in logs. Do not delete anything.

Step 2: Audit Compliance

Review your membership contracts and billing practices against Health Studio Act and ARL requirements.

Step 3: Assess Class Risk

Are other members subject to the same practices? Calculate potential class action exposure.

Step 4: Fix Issues Now

Any compliance gaps should be corrected immediately to limit ongoing exposure.

Billing Practice Improvements

  • Clear contracts: Ensure membership agreements comply with Health Studio Act requirements
  • Auto-renewal disclosure: Prominent, clear disclosure at signup with affirmative consent
  • Easy cancellation: If online signup, offer online cancellation option
  • Confirmation emails: Send billing confirmation with cancellation instructions
  • Honor requests: Process cancellations promptly and stop billing immediately

Get Professional Defense

Gym billing claims can escalate to class actions. Get professional legal assistance to respond effectively and protect your business.

Schedule Consultation - $450

California Resources

  • Health Studio Act: Civil Code 1812.80-1812.98
  • Automatic Renewal Law: Business & Professions Code 17600-17606
  • CLRA: Civil Code 1750-1784
  • UCL: Business & Professions Code 17200
📝 Need to write this type of letter? See our Demand Letter Guide →