Fitness First Australia has provided the Australian Competition and Consumer Commission with a court enforceable undertaking after concerns that Fitness First’s "Gold Coin to Join" promotion did not comply with the all inclusive pricing provisions of the Trade Practices Act 1974.
Fitness First's promotional flyers indicated the joining fee was a "gold coin" and specified an administration fee payable on joining but failed to specify, in a prominent way and as a single figure, the single total price for the membership.
Section 53C of the Act requires that corporations must prominently specify a single price for their goods or services, including all taxes, duties, fees and other mandatory charges that are quantifiable at the time of making the representation. Where services are supplied under a contract that has periodic payments, such as gym memberships, corporations are able to specify the periodic component of the single price more prominently than the single price over the life of the contract.
During January and February 2010 Fitness First displayed posters at its clubs advertising its "Gold Coin to Join" promotion. The ACCC considered that these posters did not comply with the law as they failed to state a total single price.
As part of the undertaking Fitness First has agreed to continue its FFit program for teenagers for six months until 30 November 2010 at an estimated cost of $225,000. FFit is a Fitness First initiative to address the obesity issue amongst school aged children.
Fitness First has also undertaken to publish a corrective notice on its website and in its Fitness First magazine, and will implement a trade practices law compliance program.
The ACCC has conducted a significant education program across various industries to explain the single price requirements.
"The component pricing laws have been in place for more than 12 months, businesses that do not comply with the requirement to prominently specify a single price for their goods or services risk enforcement action being taken against them by the ACCC," ACCC chairman Graeme Samuel said today.
The ACCC may take court action and seek civil penalties or issue an infringement notice.
The Australian Consumer Law gives the ACCC the ability to issue infringement notices in cases involving unconscionable conduct, some false or misleading conduct, pyramid selling and various product safety provisions. Penalties under Infringement notice provisions for false or misleading conduct are $6,600 for corporations and $1,320 for individuals.