The recent closure of the Physical Health Centre gym chain in Hong Kong has sparked significant consumer protection concerns, especially regarding long-term prepaid contracts. Over 30 members signed contracts just three days before the gym's abrupt closure on September 6, 2024, with one individual reportedly committing to a HK$360,000 (approximately US$46,000) agreement [468387f4]. Lawmaker Kwok Wai-keung has called for stricter regulations on such contracts, emphasizing the need for consumer safeguards given the gym's financial instability [688355ee].
In the aftermath of the closure, customs authorities arrested two directors, Luk Ngai-keung, 67, and Ho Yuk-wah, 68, following a surge in complaints to the Consumer Council, which have now reached HK$130 million (US$16.7 million) [468387f4]. The Consumer Council previously reported receiving 3,861 complaints, with individual claims ranging from HK$1,000 to HK$1.86 million, raising suspicions of potential breaches of the Trade Descriptions Ordinance [8362ffc2].
Despite these warnings, some clients have continued to engage with the gym's new operator, 'Healthy,' signing consent forms for complimentary services. George Silny expressed concern about losing money if his application was rejected, while Hugo Chan felt the deal for continued gym access was favorable. Lisa Tao admitted to signing without reading the terms, and Gyan Bhujel, a former California Fitness member, felt hopeless about recovering his money after signing [049970ae].
Lawmaker Michael Tien Puk-sun has suggested that businesses should only utilize 10% of prepaid funds to ensure financial stability and protect consumers, while Rex Wong Hiu-shan from the Fitness Professionals Association has expressed concerns that such regulations could hinder cash flow for businesses, potentially leading to further closures in the fitness sector [688355ee].
Additionally, police have launched a fraud investigation into the gym's operations, particularly focusing on the high-pressure sales tactics reported by customers [468387f4]. Amidst this turmoil, the Mandatory Provident Fund (MPF) authority has warned of legal action against the gym for unpaid contributions amounting to approximately HK$3 million, complicating the situation for affected employees navigating unemployment challenges [8362ffc2].
In a surprising turn, the gym has reopened under the new brand 'Healthy,' offering complimentary services, although the consent forms provided to customers remain unclear [468387f4]. Chief Executive John Lee Ka-chiu has suggested implementing a cooling-off period for prepaid contracts to better protect consumers in the future [468387f4]. Legal experts have also recommended that consumers seek more information about 'Healthy' before signing any new agreements [049970ae].