SoulCycle, New York, has preliminarily agreed to pay up to $9.2 million in an ongoing class action lawsuit that claims the fitness company sold its customers illegally expiring gift cards.
In their initial complaints, plaintiffs Rachel Cody and Lindsey Knowles accused the indoor cycling company of coercing customers into purchasing gift cards with expiration windows that did not comply with California’s state policy of five years. This, they argued, ultimately violates the Credit Card Accountability and Disclosure Act, according to documents filed with the United States District Court, Central District of California, and as reported by Law360.
SoulCycle has consented to offering two expired classes or $50 per affected customer, in addition to reassessing company policy to ensure customers understand the parameters of purchases involving studio credit.
The proposed settlement would include 229,646 classes, valued between $6.9 million and $9.2 million, according to court documents.
The new settlement motion states: “The proposed settlement provides significant economic consideration to settlement class members and meaningful changes to SoulCycle’s business practices.”
SoulCycle’s legal counsel has insisted the expiring purchases in question were individual classes, not gift cards. The plaintiffs have counter-argued the company’s strategy is a "relentless effort to maximize its profits." SoulCycle reportedly earned $25 million in expired gift cards in 2014, according to court documents.
As part of its proposed policy change, SoulCycle will ensure customers understand the distinction between the purchase of a class and a gift card, the latter of which has no expiration date.
The parties began working toward a settlement in April to avoid further litigation expenses, according to Law360.
SoulCycle opened its first New York City club in 2006 and now has more than 70 locations open or in-development in the United States. It is a sister company to Equinox. Both companies are owned by Equinox Holdings.