An Auckland gym owner's claim the Commerce Commission and 99 percent of members are happy with his request for payment when the facility is closed during lockdown has been disputed by multiple parties.
On Thursday, a Newshub investigation revealed Terry Michaels, the owner of Kingsland Health and Sports, requested members continue paying for a service they weren't receiving, either via a "no action required" full membership fee, or opting into an "on hold" fee of $10 per week.
Customers who selected these options were promised their memberships would always be at least 20 percent below future standard rates.
Those who wished to pay neither fee throughout the COVID-19 alert level 4 lockdown were required to cancel their membership - with the option of restarting it following lockdown, subject to any rejoining fees which applied at the time.
It's a method Michaels has employed throughout multiple lockdown periods and was first brought into effect during the level 4 lockdown of March 2020, which he told Newshub was subject to approval from the Commerce Commission.
"I spoke at length with the Commerce Commission over this during the very first lockdown and they got it," he told Newshub
"They said: 'Well OK, we get it... we're clear you're not charging for a service you're not providing, we understand the loyalty scheme'.
"And that's what we're trying to do - we're not trying to make anyone's life difficult."
In a later email to Newshub Michaels doubled-down on this claim, stating "our advisors, including the Commerce Commission, are comfortable that we are operating fairly and lawful".
However, a spokesperson for the Commission has told Newshub it in fact "did not endorse the conduct of Health and Sports or approve any subsequent change to its terms and conditions".
"The Commission does not give legal advice or approve contractual terms," they added.
They revealed the Commission had received multiple complaints about the gym charging customers while the facilities were not open.
"We brought those complaints to the attention of Health and Sports and advised it was possible that its conduct and/or contractual terms could raise concerns under the Fair Trading Act and that the trader should seek legal advice."
When this was put to Michaels, he conceded that the Commission did advise him to seek legal advice, "which we did".
He chose not to elaborate on the outcome of those legal proceedings.
He also argued this line of questioning was an "unsatisfying use of journalistic skills" and encouraged Newshub to write a "positive, feel-good story about small business" and to "set your bar higher".
Michaels also told Newshub "99 percent" of gym members were onboard with lockdown payment scheme including a subset of incredibly loyal members
"Like anything you try and do it's never going to work for everybody, there's always going to be one or two people it doesn't work for," he said.
"[But] we've had unbelievable support from our members they've been really, really good."
Following Thursday's article, several people contacted Newshub directly with concerns about their interactions with Kingsland Health and Sports, although its actions were also defended by some on Facebook.
One person claiming to have been a member for over 20 years said they were "shocked" at the article and they'd been "disheartened with the ongoing cost of remaining with the gym during lockdown, whilst other gyms cease fees".
They said emails sent to members asking for funds were "persuasive and manipulative" and were spurred on by requests from many members to have fees frozen during lockdown.
"The real kicker here was if you're a 'reluctant leaver' you're more than welcome to rejoin at the new inflated rate, for some, this would be close to a $10 per week increase," they said.
The member said their own fees were increased after being told keeping them at their current rate would be "financial suicide".
Another gym member, who also wished to remain anonymous, said they'd been forced to go directly to the payment provider DebitSuccess for confirmation further fees won't be debited from their account under alert level 4 and level 3.
According to the correspondence with DebitSucess, which has been provided to Newshub, while the gym is allowed to charge members during a period of no service, members must "opt-in" to that option and directly apply to have fees deducted from their accounts.
The idea that members must "opt-out" from having fees deducted is against DebtSucess' term of agreement, because "members are receiving a different service to what they initially signed up for".
"They must formally agree to this new service and its related fees before being charged for it," the DebitSucess website reads.
