Motionsoft has initiated a petition drive asking the Obama administration to protect consumers and end payment-processing and collection abuses in the health and fitness industry.
Al Noshirvani, CEO of Motionsoft, Rockville, MD, says health club members may be unknowingly signing misleading contracts, and as a result, they may be charged service and late fees as well as a cancellation fee if they drop their membership.
"It's high time that this sort of behavior be reeled in," Noshirvani says. "Unfair consumer practices are already legislated in many industries, but it has not made it to the top of anyone's inbox in the health and fitness industry, and it is still continued to be allowed."
Motionsoft published the petition on the We the People platform. For the White House to respond to the petition, 10,000 people must sign it by Feb. 27, 2015. As of Feb. 9, it had 30 signatures.
The petition elicited a mixed reaction from some third-party billing firms.
Paul Schaller, president of ABC Financial, a software and third-party billing company headquartered in Sherwood, AR, says he supports the petition as a way to stop unfair and unethical billing practices, but he doesn't think that the country needs more regulations.
"I commend Motionsoft for taking a stand in the industry, but I don't think a petition was the way I would have gone about it," he says.
Bob Riches, president of ASF Payment Solutions, a software and billing company in Highlands Ranch, CO, agrees, saying that this country is already over-regulated, and Motionsoft is seeking regulations that are already in place. For example, consumer protection laws address issues such as limits on late fees, return item fees and charging for a service not provided.
"As an industry, the providers targeted do follow these laws and recognize the need to provide quality customer service for our clients," Riches says. "This is a small industry. Club owners talk, and any billing company that attempts to engage in bogus billing tactics would get a black mark in the industry and a slew of lawsuits and fines."
Riches says that Motionsoft does not understand the level of regulations already in place for billing companies.
"It's an attempt to be relevant where they currently are not, and it's unfortunate that they are resorting to mud-slinging tactics in their own industry to draw attention to themselves," he says. "The government has a lot of important issues to focus on, but this isn't one of them."
Adam Zeitsiff, president of Jonas Fitness Inc., Webster, TX, says his company does not condone, support or partake in the abuse of consumer rights through the use of unfair or unethical business practices. He says that Motionsoft has the right to express itself freely as a company and raise awareness on specific industry issues as long as it falls within the guidelines set forth by the government.
"We obviously aren't in the position to comment on Motionsoft's marketing or PR campaigns, and we respect other people's position and opinion in the industry, just as we hope they would respect ours," he says.
The Motionsoft petition reads:
"In signing this petition, I am urging the President to protect consumers and end payment processing and collection abuses in the gym and health club billing industry by third-party billing firms. Across the country, consumers who are making healthy lifestyle choices by exercising are being punished by abusive business practices that include a mix of unfair and unethical transaction processes including hidden fees, continuing to charge customers late fees and dues after a gym or health club goes out of business, charging consumers credit card decline fees when a card is lost or stolen and abusive service charges including yearly management fees. Do not allow these firms to continue to negatively impact the health and fitness industry."
The petition is not a political statement, but is a way to educate the industry about third-party billing firms with unfair and unethical business practices, Noshirvani says. To spread the word, Motionsoft is communicating with Sen. Elizabeth Warren's (D-MA) office and sponsoring a session at IHRSA in March titled, "The Hidden Impact of Your Process May Be Killing Your Business."
"Our goal is to start a conversation," Noshirvani says. "We want to make sure our industry understands what they do to themselves and their members when they partner with companies like that."
Noshirvani says some of his customers told him they want to transition to providers that offer software for free, but no one can truly offer free software.
"We wouldn't be in business if we were giving software away for free, and neither would these other companies," he says.
Noshirvani contends that third-party billing firms are charging hidden fees, which is reflecting poorly on the fitness industry as a whole. According to the online petition, some members are charged late fees after a gym or club has gone out of business.
For example, the members of WOW Fitness are trying to recover charges after a Work Out World Fitness club closed on Dec. 29 in St. Cloud, MN. According to an article in the St. Cloud Times, the gym charged them an end-of-the-year annual fee and dues for January, even though the gym had closed.
ABC Financial was the billing company for that facility. ABC's Schaller says this health club closed without much advanced warning, and his company had to verify that the facility had indeed stopped operations before ceasing the billing process. Also, his company had already started the process of preparing January bills for the club's members when the club closed on Dec. 29. When it learned that the gym was no longer in business, ABC Financial immediately stopped billing the gym's customers, Schaller says. Now the company is working with the former members individually to resolve the situation.
Noshirvani says the WOW case is not the only time club members have complained about their fitness facilities' billing practices, and some fitness professionals have left the industry because their vendors were taking advantage of their customers.
He urged club owners to check out companies's track records with agencies such as the Better Business Bureau.
"The smartest thing that any gym owner can do is to go online and learn about these companies before they start working with them," Noshirvani says.