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Prepaid Entertainment Contracts

Prepaid Entertainment Contracts

Laws protect consumers who sign and agree to prepaid entertainment contracts. Examples of prepaid entertainment contracts are gym memberships, dance studios, dating services, massage companies and spas, martial arts facilities, sports clubs, weight reduction centers, and other services requiring monthly payments.

Prepaid entertainment contracts have to be in writing and signed by the consumer and the servicer before the contract begins. The contract has to be under three years and the consumer cannot be charged more than ten percent of the total contract before the services are made available.  Servicers must tell consumers orally about a right to cancel the contract and must provide two printed copies of the cancellation rights along with the agreement at the signing.

Every consumer is eligible for a three day right to cancel after signing. A disclosure in bold print should verify all rights to cancel the contract. A consumer disability also justifies the right to cancel and relocation of the company facility more than 25 miles away from a previous location is also reasonable cause to cancel. It is also illegal for a company to waive the right of the consumer to cancel in the contract. Every consumer has the right to cancel.

The company cannot deny a cancellation and must stop charging a consumer after canceling. A company failing to provide a consumer with the rights to cancel in the agreement at signing can allow a consumer to cancel at any time, even years after the contract began. A consumer lawyer can provide assistance to consumers dealing with companies not following the law and struggling with canceling a membership. Consumers who sign contracts before a facility opens are protected by additional rights.

 

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Your Rights under the Prepaid Entertainment Contract Act

Your Rights under the Prepaid Entertainment Contract Act

The Prepaid Entertainment Contract Act (PECA) provides protection to consumers who have entered into agreements for prepaid agreements for certain services.  PECA covers a variety of contracts, ranging from Gym Memberships, Dance lessons, Martial Arts lessons, to online dating services.

In 2012, the Ohio Attorney General instituted an action against a Fitness Center for purported violations of PECA.  The court in Ohio v. Riffle concluded that the Fitness Center violated PECA by, amongst other things, the following actions:

  • Failing to provide consumers with proper notice of their right to cancel a prepaid entertainment contract as required by PECA
  • Closing the fitness facilities and failing to provide refunds for the unused portions of the contract and failing to arrange for a substantially similar fitness facility located within 25 miles of the customers’ residences as required by PECA, which was also a violation of the Consumer Sales Protection Act (CSPA)
  • Failing to honor cancellations made by consumers during PECA’s three-day mandatory cooling off window
  • Failing to honor valid cancellations made due to a consumer’s disability that prevented the consumer’s enjoyment of the contract’s purpose as required by PECA
  • Failing to honor cancellations made after consumers moved outside of a 25 mile radius of the facilities
  • Failing to provide refunds to consumers within 10 days after valid cancellations of contracts as required by PECA
  • Representing in the contract that certain services, such as childcare, would be available, and failing to provide such services

In Riffle, the Defendant was permanently enjoined from committing any unfair, deceptive, or unconscionable act or practice which violated the CSPA or PECA. The Defendant was further ordered to pay consumer damages and a civil penalty, as well as cease all pending collection actions against other consumers.

 

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