Gym membership price increase during initial term. Legal?

[gray1404]

Can somebody knowledgeable advise if it is legal under contract law for the monthly price of a gym membership to be increased during the initial term?

In February I signed up for 12 month gym member. I paid pro rata until the next direct debit cycle, starting 15 March and was advised I would charged £24 per month for 12 months thereafter before the contract becomes rolling.

I received an email confirmation of this from the company the gym uses to collect direct debits. This merely states: date of first direct debit, amount of first and subsequent payments and contract term of 12 months.

A copy of the terms and conditions as attached and there is nothing whatsoever regarding a price increase mentioned.

Last week I received an email advising of a price increase from the gym. Today I received an email from the company they use to collect the direct debits advising of the same and that this would take effect from June. The email expressly confirms that they have updated my direct debit and the amount of the new monthly payment from June.

I am wondering if it is legal for them to do this or if they are not allowed to increase the amount charged until I am at the end of the initial 12 month term.

It is only a small increase per month but it is the principle of the matter so I would be grateful of any advice.

 

[Bletchleyite]

I believe it is only legal if the contract stipulates that it can occur, as all mobile phone contracts do.

If the contract states a fixed £24 per month, this would not be legal.

 

[Mcr Warrior]

Depends on the contract. Can you photograph / cut and paste same on here, with your personal details redacted?

 

[66701GBRF]

I'd be amazed if there wasn't some +RPI clause in there somewhere.

 

[jon0844]

Gyms appear to have convinced regulators that they'll be nice to certain people - and do things like allow people to suspend memberships, or leave their contract if they move away from the area. There are some other concessions they made, which in return allows them to have a 90 day cancellation period and other clauses that it took decades to get rid of in other industries. Suffice to say, the things they're allowed to do make them more money than cancelling a few contracts early here and there (and I believe even then, they don't make it easy).

In the communication sector, RPI became CPI+nn% and then it being allowed to be charged potentially only a month or two after signing a 24 or 36 month contract. The nn% figure is particularly sus in that inflation is one thing, but here's an arbitrary amount that is being added every year with no clearly defined reasoning and breakdown.. plus the mobile networks all settled on 3.9%. Nice and cartel like.

In return for being allowed to do this, they all offer cheaper plans for poorer people - although in many cases the tariffs are so limited, people will end up paying more voluntarily.

And then there's the concessions to the energy sector.

One would almost begin to think our regulators are useless, or just helping protect big business.

 

[najaB]

Can somebody knowledgeable advise if it is legal under contract law for the monthly price of a gym membership to be increased during the initial term?

It is if the contract says that it is. But that would normally be accompanied by a term allowing you to exit the contract with no penalty.

 

[gray1404]

I'll upload a.copy of terms and conditions tomorrow.

 

[island]

If it's specified clearly in the contract that the price could rise part way through, and how the price rise would be calculated, then you are stuck with it.

If it's not specified, they still have the entitlement to increase the price but you gain an entitlement to cancel your membership despite any minimum term.

"Unfair contract terms" legislation does not apply to terms setting the price to be paid under the contract as long as they are set out in clear and plain language. This was confirmed by the Supreme Court in 2009.

 

[Bletchleyite]

It is if the contract says that it is. But that would normally be accompanied by a term allowing you to exit the contract with no penalty.

Not universally now. Mobile phone contracts contain an escalator clause but not an exit clause. I suppose for legality stating what the increase will be up front helps, as it then can form part of the decision whether to sign the contract or not; an undefined annual increase could give rise to triggering "unfair contracts" legislation.

 

[jon0844]

Not universally now. Mobile phone contracts contain an escalator clause but not an exit clause. I suppose for legality stating what the increase will be up front helps, as it then can form part of the decision whether to sign the contract or not; an undefined annual increase could give rise to triggering "unfair contracts" legislation.

It's crazy Ofcom allowed this, and indeed every other regulator allowing similar - such as gym contracts. There used to be a time when you signed a contract precisely so you could lock in a price, with the understanding that prices might go up AFTER your minimum term. It's why people signed up on two or three year contracts.

Of course now 2 or 3 year contracts are pushed to users and most people aren't even aware that a network must offer a 12 month option. Except now the 12 month options are usually priced stupidly high, with 30 day contracts even worse.

But it is in the contract and they do, to be fair, generally advertise the CPI+3.9% increase quite clearly in the small print in adverts, yet still advertise the per month charge even if they know that someone signing up in February will get hit on their March/April bill. One month at the advertised price before a 10% increase is at the very least cheeky.

(Very off topic now) Ofcom is seeking feedback on plans to get rid of net neutrality, which would also ISPs to throttle things like YouTube or Netflix and make customers pay more for certain services. In effect, they could restrict whatever they wanted unless you paid more. The EU made this illegal, but Ofcom is consulting and I guarantee most consumers aren't aware that a) the consultation is ongoing or b) how it might affect them. As such, they'll likely say nothing and the networks will get their way unopposed.

It really is a race to the bottom.

 

[Howardh]

If you are in a contract, and during that contract period the price rises, I think you have a right to cancel? Thinking that happens with my Sky Broadband, I'm under contract for 12 months but I do have thta right if the price goes up?

 

[Bletchleyite]

(Very off topic now) Ofcom is seeking feedback on plans to get rid of net neutrality, which would also ISPs to throttle things like YouTube or Netflix and make customers pay more for certain services. In effect, they could restrict whatever they wanted unless you paid more. The EU made this illegal, but Ofcom is consulting and I guarantee most consumers aren't aware that a) the consultation is ongoing or b) how it might affect them. As such, they'll likely say nothing and the networks will get their way unopposed.

Could you start a new thread and post details? Plenty of people on here will I suspect want a say.

 

[najaB]

If you are in a contract, and during that contract period the price rises, I think you have a right to cancel? Thinking that happens with my Sky Broadband, I'm under contract for 12 months but I do have thta right if the price goes up?

Depends on the contract. As noted above, some contracts have a built-in clause that allows increases by a pre-determined amount (e.g. RPI + 1%). As long as the increase is that amount or lower then you would be bound to it. If the increase is above whatever amount was agreed then you would have the right to cancel.

 

[Snow1964]

If you have a 12 month contract at £x per month, then the price is fixed for the 12 month term. Basic contract law, if price is fixed, then it is not changeable during the term.

After that period, any rollover or extension will revert to the general terms which might include a price escalator. If you had say a 24 month contract, might allow price rise after a year (many phone contracts are of this format), but it would say so in the terms.

You should lodge a complaint and get it confirmed to you that the price rise notice was issued in error, and won't be implemented for you (even if it applies to others).

 

[island]

If you have a 12 month contract at £x per month, then the price is fixed for the 12 month term. Basic contract law, if price is fixed, then it is not changeable during the term.

But it is not at all clear that the OP did in fact have a contract with a price fixed for a 12 month term. Contracts of any length may have a price increase clause.

 

[jon0844]

If you are in a contract, and during that contract period the price rises, I think you have a right to cancel? Thinking that happens with my Sky Broadband, I'm under contract for 12 months but I do have thta right if the price goes up?

People on older plans will very likely have a clause along the lines of a price rise above inflation (RPI or CPI) will allow a no-penalty cancellation of your contract, which many people have taken advantage of in previous years (sometimes ending up with a phone they've only paid a few months for and without having to return it because - generally - the phone isn't provided on a hire purchase, but owned outright from day one). I am pretty sure those contracts ended years ago.

Long fought for rights seem to be getting eroded through apathy or ignorance, or companies finding clever ways to reduce our rights by promising to help a small group (and then doing very little to actually help). I guess politicians like the fact they can say that someone who falls on hard times can walk away from their contract, while not caring that everyone else gets eyewatering price hikes mid-contract and have no protections at all.

I am not happy with CPI increases, but accept them more than the crazy 3.9% price hike that is essentially extra profit. It's even more ridiculous that if you are part way through a contract, chances are they'll waive the price rise if you re-sign a new 18, 24 or 36 month contract.

 

[Snow1964]

But it is not at all clear that the OP did in fact have a contract with a price fixed for a 12 month term. Contracts of any length may have a price increase clause.

Op stated in opening post told it was £24 per month for 12 months.

That is clearly a fixed price offer /quote.

 

[Bletchleyite]

Op stated in opening post told it was £24 per month for 12 months.

That is clearly a fixed price offer /quote.

Escalator clauses are often quite hidden in the T&C.

 

[Snow1964]

Escalator clauses are often quite hidden in the T&C.

True, but would also need to be be advised in the quote

A specific quoted offer takes precedence over general terms where there is a conflict. If it was stated as £24 then it is £24. If it was stated as initially £24 then that is different.

If someone in the gym made a mistake and wrote £24 for 12 months then they are bound by it, unless they correct their mistake before taking consideration for the contract (which appears to be drawing first direct debit). They can't get few months in and then unilaterally change the terms. If that sort of thing was allowed could have insurance companies changing your premium mid year etc

 

[Starmill]

Escalator clauses are often quite hidden in the T&C.

The OP does say they found no evidence of a clause about price changes in the terms and conditions.

If it were true that the conditions are in fact silent on the matter of price changes, then this change would open a new route to cancel the contract, including during an otherwise minimum term.

It's important to know for sure what the original terms and conditions actually said.

 

[Bletchleyite]

True, but would also need to be be advised in the quote

A specific quoted offer takes precedence over general terms where there is a conflict. If it was stated as £24 then it is £24. If it was stated as initially £24 then that is different.

If someone in the gym made a mistake and wrote £24 for 12 months then they are bound by it, unless they correct their mistake before taking consideration for the contract (which appears to be drawing first direct debit). They can't get few months in and then unilaterally change the terms. If that sort of thing was allowed could have insurance companies changing your premium mid year etc

However it'd be legal if the quote said "terms and conditions apply" and had a link to them or had them on the back if in paper form, and those T&Cs included a specific escalator clause (e.g. "no more than RPI+5%" or somesuch). An open escalator clause would likely be seen as unfair in a court.

It's important to know for sure what the original terms and conditions actually said.

Indeed.

Though it is worth knowing that either way the OP is unlikely to be able to force the honouring of the original price. If it's in the T&C it's legal. If it's not in the T&C what has happened is a breach by the provider, and as such the consumer can cancel immediately and without penalty if they wish.

 

[Starmill]

True, but would also need to be be advised in the quote

A specific quoted offer takes precedence over general terms where there is a conflict. If it was stated as £24 then it is £24. If it was stated as initially £24 then that is different.

If someone in the gym made a mistake and wrote £24 for 12 months then they are bound by it, unless they correct their mistake before taking consideration for the contract (which appears to be drawing first direct debit). They can't get few months in and then unilaterally change the terms. If that sort of thing was allowed could have insurance companies changing your premium mid year etc

This sounds like you would be arguing that the original statement of the price wasn't sufficiently clear, which is a real uphill battle by comparison with just relying on the wording of the original terms.

Though it is worth knowing that either way the OP is unlikely to be able to force the honouring of the original price. If it's in the T&C it's legal. If it's not in the T&C what has happened is a breach by the provider, and as such the consumer can cancel immediately and without penalty if they wish.

I agree very much, though of course the OP in the latter scenario may wish to rely on their right to cancel if, for example, another gym group nearby can offer a now better price. That's up to them how to proceed.

 

[island]

If someone in the gym made a mistake and wrote £24 for 12 months then they are bound by it, unless they correct their mistake before taking consideration for the contract (which appears to be drawing first direct debit). They can't get few months in and then unilaterally change the terms. If that sort of thing was allowed could have insurance companies changing your premium mid year etc

I would go further and say that they can't change an agreement until it is signed. Consideration has passed between the parties at the point of signing: the member's promise to pay £24 (or however much) for 12 months, and the gym's promise to let them use the facilities. Consideration need not be money.

however:

It's important to know for sure what the original terms and conditions actually said.

This is the key factor and I hope the OP will be back to advise.

 

[jon0844]

True, but would also need to be be advised in the quote

A specific quoted offer takes precedence over general terms where there is a conflict. If it was stated as £24 then it is £24. If it was stated as initially £24 then that is different.

If someone in the gym made a mistake and wrote £24 for 12 months then they are bound by it, unless they correct their mistake before taking consideration for the contract (which appears to be drawing first direct debit). They can't get few months in and then unilaterally change the terms. If that sort of thing was allowed could have insurance companies changing your premium mid year etc

Frankly, I wouldn't be surprised if this didn't become a thing in the future.

While it's rare, phone networks (EE and Three have done this that I know of, and Three actually did it to me so it isn't even hearsay) have chosen to end a contract earlier and force customers to either accept a price hike or leave. Ofcom doesn't have an issue with that because the customer isn't forced to accept a price rise, they just end up with no service. A risky strategy perhaps if you might go elsewhere, but one that enables them to force you off a contract that may have more favourable terms and accept a newer one that is worse, and likely replicated on other networks too.

What's to say that an insurance company won't decide to just cancel your policy, without you ever having made a claim, simply giving a pro-rata refund and then saying 'if you still want to drive, just pay as £xxx more'? Is this allowed now, and if not - could it be one day? What if you can't find another company offering a similar deal, and won't just do the same?

I always thought we fought hard to protect consumers, but as time goes on it seems we're going back to where things were in the 80s and 90s, and treating consumers more like business customers.

 

[island]

What's to say that an insurance company won't decide to just cancel your policy, without you ever having made a claim, simply giving a pro-rata refund and then saying 'if you still want to drive, just pay as £xxx more'? Is this allowed now, and if not - could it be one day? What if you can't find another company offering a similar deal, and won't just do the same?

I would expect that to fall foul of the FCA Consumer Duty rules coming into effect in July.

 

[Bletchleyite]

I would expect that to fall foul of the FCA Consumer Duty rules coming into effect in July.

Also, insurance policies are normally sold as an annual thing paid up front, but with an optional attached personal loan to pay them monthly if you prefer that (with a quoted interest rate). Thus unless you defaulted on the loan or had lied or omitted material facts when applying I can't see why they'd have any grounds to cancel the policy mid-term. It's not a monthly fee like a gym membership is.

 

[najaB]

Op stated in opening post told it was £24 per month for 12 months.

That is clearly a fixed price offer /quote.

It depends entirely on how it was phrased. "It's a 12-month contract at £25 per month" is different to "So, that's £25 and it's a 2-month contract" or similar.

 

[jon0844]

Also, insurance policies are normally sold as an annual thing paid up front, but with an optional attached personal loan to pay them monthly if you prefer that (with a quoted interest rate). Thus unless you defaulted on the loan or had lied or omitted material facts when applying I can't see why they'd have any grounds to cancel the policy mid-term. It's not a monthly fee like a gym membership is.

I agree, but I did say that if they decided they didn't want to cover you - they could refund pro-rata. I am not saying they could do this now, or they would try to do this later, just that nothing would surprise me if they did decide it could be nice to have that option to cancel policies if they suddenly think it isn't in their interest to take on the risk. Let's imagine that a car suddenly has an issue that could lead to more risk (higher chance of a fire or something) and they don't want to be liable.

For those who pay monthly, it could be even easier for them to do it. Just make it a 30 day policy that renews, and you can 'sign' up for 1 year to get a discount and even prepay if you so wish, but technically the policy is renewing on a rolling basis - and maybe they can change the terms. Then, yes, you can cancel but do you want to cancel when you need insurance?

 

[gray1404]

Contract attached as promised.

 

[najaB]

It doesn't appear to me that they have any grounds to increase your payment, they specifically say that the subsequent payments are £24 and there's no clause giving them the right to change it.