[HISTORY: Adopted by the Rockland County
Legislature 1-15-1991 by L.L. No. 2-1991. Amendments noted where
applicable.]
[1]
Editor's Note: Former Ch. 283, Health Clubs,
adopted 11-16-1982 by L.L. No. 9-1982, was repealed 1-15-1991 by L.L.
No. 1-1991.
A.
The Rockland County Legislature finds that there exists,
in connection with a number of contracts for health club services,
sales practices and business and financing methods which may have
resulted in deception and financial hardship upon the people of this
County, that existing legal remedies are inadequate to correct these
abuses, that the health club services industry has a significant impact
upon the economy and well being of this County and its local communities
and that the provisions of this chapter relating to such contracts
are necessary for the public welfare.
B.
The Rockland County Legislature declares that the
purpose of this chapter is to safeguard the public and the ethical
health club industry against deception and financial hardship and
to foster and encourage competition, fair dealing and prosperity in
the field of health club services by prohibiting or restricting false
or misleading advertising, erroneous contract terms, harmful financial
practices and other unfair, deceptive and discriminatory practices
which have been conducted by some health club operators.
As used in this chapter, the following terms
shall have the meanings indicated:
Any individual who enters into a contract for services with
a health club.
A contract for consumer services for instruction, training
or assistance in body building, exercising, weight reducing, figure
development, the martial arts, to include judo, karate and self-defense,
or any similar course of physical training to be provided for the
future use by a consumer of the facilities providing the foregoing
instruction, training or assistance or for membership in any group,
club, association or organization for any of the above purposes, except,
however, that a contract for services shall not mean or include:
Membership in any group, club, association or
organization which provides any of the foregoing services and which
is organized pursuant to the provisions of the Not-For-Profit Corporation
Law.
Boarding accommodations.
Travel arrangements contracted for less than
one year in advance.
Contracts which incorporate warranties of services
or repair given in conjunction with appliances or other goods, where
the sale of goods is the primary object of the contract.
Services by a college or university chartered
by the University of the State of New York, a secondary school, an
elementary school, a nursery school or kindergarten.
Contracts for services to provide instruction,
training or assistance to acquire a vocation or skill conducted in
a training school or by home study.
The Director of Consumer Protection and Public Advocate.
[8-5-2020 by L.L. No. 4-2020]
Any person, firm, corporation, partnership, unincorporated
association or other business enterprise offering instruction, training
or assistance or the facilities for the preservation, maintenance,
encouragement or development of physical fitness or well being. Such
term shall include but shall not be limited to health spas, sports,
tennis, racquetball, platform tennis and health clubs, figure salons,
health studios, gymnasiums, weight control studios, martial arts and
self-defense schools or any other similar courses of physical training.
Any person, firm, corporation, partnership, unincorporated
association or other business enterprise which operates or intends
to operate a health club.
A.
All moneys received by a seller pursuant to a contract
for services for use by a buyer of a health club prior to the full
operation of such health club shall be placed in escrow.
(1)
Such funds shall be kept and maintained in an account
separate and apart from any account maintained by or for the seller's
personal use or for use in the construction or operation of the health
club or for the payment or benefit of employees of the seller.
(2)
The escrow account shall be established in a bank
or trust company doing business in this state.
(3)
The escrow account shall provide that the purpose
of the account is to protect the consumer in the event that the seller
fails to complete substantially and to open the facility within one
year following establishment of the account. Any buyer who has advanced
moneys on deposit in the escrow account may maintain a representative
action pursuant to the provisions of the Civil Practice Law and Rules
to close the account and to release such moneys pro rata to all buyers
similarly situated if such health club facility has not been substantially
completed and opened within one year of establishment of the account
or if the buyer has not had the full use of another similar facility
during this period.
(4)
Within three business days of a request therefor,
a monthly statement of the escrow account is to be furnished to consumers
who have advanced funds or obligation until such account is no longer
required by this chapter.
(5)
The escrow account shall provide that funds deposited
therein may be withdrawn by the seller upon the completion of the
proposed construction in the following manner:
(a)
One-third of the funds may be distributed to
the seller upon completion of 1/2 of the proposed construction.
(b)
Not more than 2/3 of the funds which have been
deposited in escrow may be released upon the completion of 3/4 of
the proposed construction.
(c)
The escrow agent may accept as evidence of partial
completion certification of any architect or engineer licensed pursuant
to the provisions of the Education Law that the proposed construction
has been completed in accordance with the plans and specifications.
(6)
The escrow account shall be released by the escrow
agent to the seller not more than 30 days following full operation
of the facility and certification of completion from any architect
or engineer licensed pursuant to the provisions of the Education Law.
B.
In lieu of the escrow provisions required by this
section, the health club may furnish information as required by the
Director, executed under penalty of perjury by an officer or owner
of the health club, which reasonably demonstrates financial responsibility
that will enable the health club to satisfy the possible claims against
the escrow required by this section. In the event the health club
is controlled by, under common control with or controls another corporation
and the other corporation agrees, in writing, to satisfy the claims
against the escrow required by this section, then the financial responsibility
of the other corporation shall be considered in determining the applicability
of this section. In determining whether the health club has the requisite
financial responsibility, the Director may consider the operating
and business history and reputation of the health club and its management
within and without the state as well as the operating and business
history and reputation of any business controlled by, under common
control with or controlling the health club.
[Amended 8-5-2020 by L.L. No. 4-2020]
A.
Every health club, except as provided in Subsection J of this section, before it enters into any contract for services for use by a buyer of a health club, shall file and at all times maintain with the Director, in form, amount as prescribed herein and substance satisfactory to him:
[Amended 8-5-2020 by L.L. No. 4-2020]
(1)
A bond with a corporate surety, from a company authorized
to do business in this state; or
(2)
An irrevocable letter of credit or a certificate of
deposit from a New York State or federally chartered bank, trust company,
savings bank or savings and loan association qualified to do business
in New York State and insured by the Federal Deposit Insurance Corporation
or the Federal Savings and Loan Insurance Corporation.
B.
The principal sum of the bond, letter of credit or
certificate of deposit shall be;
(1)
Fifty thousand dollars, if the health club sells contracts
for services for a term not greater than 12 months.
(2)
Seventy-five thousand dollars, if the health club
sells contracts for services for a term more than 12 months and up
to 24 months.
(3)
One hundred fifty thousand dollars, if the health
club sells contracts for services for a term more than 24 months and
up to 36 months.
C.
For health clubs with three or more locations or for multiple franchises of a common franchisor, the following amounts shall be added to the sum required in Subsection B of this section for the bond, letter of credit or certificate of deposit:
D.
The bond, letter of credit or certificate of deposit shall be payable in favor of the County of Rockland for the benefit of any buyer injured in the event that the seller goes out of business prior to the expiration of the buyer's contract for services or otherwise fails to provide a refund to the buyer after cancellation of the buyer's contract for services as provided for in § 283-6 of this chapter.
E.
The aggregate liability of the surety upon the bond
or the banking organization upon the letter of credit or certificate
of deposit to all persons for all breaches of the conditions of the
bond shall in no event exceed the amount of the bond, letter of credit
or certificate of deposit.
F.
The bond, letter of credit or certificate of deposit
filed and maintained pursuant to this section shall not be canceled,
revoked or terminated except after notice to and with the consent
of the Director at least 45 days in advance of such cancellation,
revocation or termination.
[Amended 8-5-2020 by L.L. No. 4-2020]
G.
Any person claiming against the bond, letter of credit
or certificate of deposit may bring and maintain an action against
the seller and the surety or bank, trust company, savings bank or
savings and loan association.
H.
For the purposes of this section, a health club shall
be considered to be a new health club subject to the requirements
of a bond, letter of credit or certificate of deposit as provided
herein at the time the health club changes ownership or, in the case
of corporate ownership, at the time 30% or more of the stock changes
or has changed ownership. A change in ownership of a health club shall
not release, cancel or terminate liability under this section under
any bond, letter of credit or certificate of deposit filed for a health
club as to any buyer who purchases a health club contract while such
bond, letter of credit or certificate of deposit is in effect unless
the transferee, purchaser, successor or assignee of such health club
obtains a bond, letter of credit or certificate of deposit under this
section for the benefit of such buyer.
I.
No contract for services shall be enforceable against
the buyer if the seller has failed to comply with any requirements
of this section.
J.
Health clubs shall be excluded from the requirement
to file a bond, letter of credit or certificate of deposit if all
payments for which the buyer is obligated, including but not limited
to down payments, initiation fees, enrollment fees, membership fees
or any other direct payments to the health club, do not exceed $100
and if the term of the contract, including but not limited to any
complimentary, compensatory or other extensions of the term incident
to the contract, does not exceed three months. Additionally, any health
club which owns five or more acres of real property which is used
directly for the purpose for which the club is formed and any health
club the use of which is exclusively restricted to residents of a
homeowners' association, cooperative or condominium and which is owned
by and operated on the premises of such homeowners' association, cooperative
or condominium shall be excluded from the requirement to file a bond,
letter of credit or certificate of deposit.
A.
No contract for services shall require payment by
the person receiving service or the use of the facilities of a total
amount in excess of $3,600 per annum; provided, however, that this
subsection shall not apply to contracts relating solely to the use
of tennis, platform tennis or racquetball facilities.
B.
No contract for services shall provide for a term
longer than 36 months. No contract for services shall require payments
or financing by the buyer over a period in excess of 37 months from
the date the contract is entered into nor shall the term of any such
contract be measured by or be for the life of the buyer; provided,
however, that the services to be rendered to the buyer under the contract
may extend over a period not to exceed three years from the date the
contract is entered into with the right to renew, at the option of
the buyer, for a like period. The buyer may have 30 days after the
expiration to renew the contract. The installment payments shall be
in substantially equal amounts exclusive of the down payment and shall
be required to be made at substantially equal intervals not to exceed
one month.
C.
No contract for services may contain any provisions
whereby the buyer agrees not to assert against the seller or any assignee
or transferee of the health club services contract any claim or defense
arising out of the health club services contract.
D.
No contract for services may require the buyer to
execute a promissory note or series of promissory notes which, when
negotiated, cuts off as to third parties a defense which the buyer
may have against the seller.
E.
No contract may be assigned by one health club to
another health club not located on the same premises without written
consent of the buyer.
A.
Every contract for services at a planned health club
or a health club under construction shall, at the option of the buyer,
be voidable in the event that the health club and the services to
be provided pursuant to such contract are not available within one
year from the date the contract is executed by the buyer.
B.
Every contract for services shall provide that such
contract may be canceled within three business days after the date
of receipt by the buyer of a copy of the written contract. Notice
of cancellation shall be delivered by certified or registered United
States Mail at the address specified in the contract. Such contract
shall contain the following written notice in at least ten-point bold
type: CONSUMERS RIGHT TO CANCELLATION. YOU MAY CANCEL THIS CONTRACT
WITHOUT ANY PENALTY OR FURTHER OBLIGATION WITHIN THREE DAYS FROM THIS
DATE. Notice of cancellation shall be in writing subscribed by the
buyer and mailed by registered or certified United States Mail to
the seller at the address specified in such form. Such notice shall
be accompanied by the contract forms, membership cards and any other
documents or evidence of membership previously delivered to the buyer.
All moneys paid pursuant to such contract shall be refunded within
15 business days of receipt of such notice of cancellation. If the
buyer has executed any credit or loan agreement to pay for all or
part of health club services, any such negotiable instrument executed
by the buyer shall also be returned within 15 days.
C.
Every contract for services shall provide that after such three-day period for cancellation as provided in Subsection B of this section, the buyer's estate may cancel a contract for services if the buyer dies. The buyer may also cancel after three days if the buyer becomes significantly physically disabled for a period in excess of six months or moves his residence to a location more than 25 miles from a health club operated by the seller or after the services are no longer available or substantially available as provided in the contract because of the seller's permanent discontinuance of operation or substantial change in operation. Nothing contained herein shall restrict or prohibit the seller from offering or providing in such contract additional or broader reasons for cancellation. The seller may require reasonable evidence for a cancellation pursuant to this subdivision. Such contract shall contain the following notice captioned in at least ten-point bold type:
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ADDITIONAL RIGHTS TO CANCELLATION:
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You may also cancel this contract for any of
the following reasons:
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If upon a doctor's order, you cannot physically
receive the services because of significant physical disability for
a period in excess of six months.
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If you die, your estate shall be relieved of
any further obligation for payment under the contract not then due
and owing.
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If you move your residence more than 25 miles
from any health club operated by the seller.
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If the services cease to be offered as stated
in the contract.
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D.
All moneys paid pursuant to such contract canceled
for the reasons contained in this subdivision shall be refunded within
15 days of receipt of such notice of cancellation; provided, however,
that the seller may retain the expenses incurred and the portion of
the total price representing the services used or completed, and further
provided that the seller may demand the reasonable cost of goods and
services which the buyer has consumed or wishes to retain after cancellation
of the contract. In no instance shall the seller demand more than
the full contract price from the buyer. If the buyer has executed
any credit or loan agreement to pay for all or part of health club
services, any such negotiable instrument executed by the buyer shall
also be returned within 15 days.
A.
No assignee who takes a note or other obligation as consideration for a contract containing the disclosure requirements of § 283-6 of this chapter shall fail to honor the consumer's right of cancellation as provided in this chapter.
B.
No creditor holding a note or other obligation to
which a consumer has obligated himself in order to purchase a contract
shall fail to honor the consumer's right of cancellation under this
chapter if:
(1)
The creditor is a person related to the seller of
services;
(2)
The seller prepares documents used in connection with
the loan;
(3)
The creditor supplies forms to the seller used by
the consumer in obtaining the loan;
(4)
The creditor makes 20 or more loans in any calendar
year, the proceeds of which are used in transactions with the same
seller or with a person related to the same seller;
(5)
The consumer is referred to the creditor by the seller;
(6)
The creditor, directly or indirectly, pays the seller
any consideration whether or not it is in connection with the particular
transactions; or
(7)
The creditor participated in or was connected with
the sale.
C.
No assignee of a contract shall fail to give notice
of the assignment to the consumer. A notice of assignment shall be
in writing addressed to the consumer at the address shown on the contract
and shall identify the contract.
It is hereby declared to be an unfair and deceptive
trade practice and unlawful for a seller to:
A.
Misrepresent directly or indirectly in its advertising,
promotional materials or in any manner the size, location, facilities
or equipment of its studio or place of business or the number or qualifications
of its personnel.
B.
Use or refer to fictional organization divisions or
position titles or make any representation which has the tendency
or capacity to mislead or deceive consumers as to the size or importance
of the business, its divisions or personnel or in any other material
respect.
C.
Misrepresent directly or indirectly the size, importance,
location, facilities or equipment of the business through use of photographs,
illustrations or any other depictions in catalogs, advertisements
or other promotional materials.
D.
Misrepresent the location or locations at which its
services will be offered.
E.
Misrepresent the nature of its courses, training devices,
methods or equipment or the number, qualifications, training or experience
of its personnel, whether by means of endorsements or otherwise.
F.
Misrepresent the nature and extent of any personal
services, guidance, assistance or other attention the business will
provide for consumers.
G.
Designate or refer to his sales representation using
terms that misrepresent in any other manner, the titles, qualifications,
training, experience or status of his salesmen, agents, employees
or other representatives.
H.
Misrepresent in any manner by the seller or his assignee
the buyer's right to cancel under this chapter.
A.
Any contract for services which does not comply with
the applicable provisions of this chapter shall be void and unenforceable
as contrary to public policy.
B.
Any waiver by the buyer of the provisions of this
chapter shall be deemed void and unenforceable by the seller as contrary
to public policy.
A.
Any buyer damaged by a violation of this chapter may
bring an action for recovery of damages. Judgment may be entered in
an amount not to exceed three times the actual damages, plus reasonable
attorney fees.
B.
Nothing in this chapter shall be construed so as to
nullify or impair any right or rights which a buyer may have against
a seller at common law, by statute or otherwise.
A.
Any seller or his assignees who violate any provision
of this chapter or who shall counsel, aid or abet such violation shall
be liable for a civil fine or not more than $2,500 for each violation.
The provisions of this chapter are not exclusive and do not relieve
the seller or his assignees or the contracts subject to this chapter
from compliance with all other applicable provisions of law.
Amended 8-5-2020 by L.L. No. 4-2020]
In addition to the remedies hereinbefore provided, the Director may bring an action on behalf of the people of the County to restrain further violations of this chapter, to enforce the provisions of § 283-4 of this chapter and for such other relief as may be appropriate.
