The owner and operator of two major New York gym chains was slapped with a lawsuit this week for allegedly swindling members into paying for memberships throughout the coronavirus pandemic, despite prolonged closures that kept people out of the gym.
The lawsuit, filed by New York Attorney General Letitia James, claims Town Sports International Holdings (TSI), which owns New York Sports Club and Lucille Roberts gyms, "used its members as a source of interest-free financing for TSI’s operations" since March.
Up until mid-August, all gyms in New York had been closed since March 16 by executive order in an effort to stem the spread of COVID-19.
However, TSI has "repeatedly and persistently flouted its obligations," through September, the suit states.
TSI allegedly charged membership dues "for services not being offered" and neglected to issue credits "as promised." The suit also alleges that TSI imposed "unlawful fees and advanced notice requirements on cancellation requests," misled consumers about their rights to cancel their membership and did not honor their cancellation requests.
"While the mandatory closure of gyms has been undeniably challenging for the industry, financial distress does not relieve gyms – or any other companies – from their obligations under the law," the suit states.
The suit states that many of the gym's members had tried to cancel their membership due to losing their job as a result of the ongoing pandemic.
However, consumers still "went to extraordinary lengths to comply with the letter and spirit of the requirements set forth in TSI’s contracts."
Members allegedly "sent letters by certified and registered mail to multiple TSI addresses, submitting requests by email or on TSI’s website following TSI’s explicit promise that such cancellations would be accepted, and even appearing in person," according to the suit.
Some members received written acknowledgment from TSI that their request was processed and that they would not be "billed any further and there is no cancellation fee.”
Still, "TSI charged them on September 1, 2020, and there is no reason to think TSI will not continue to do so indefinitely."
The suit pointed to the company's "Hotel California-style approach to its members -- 'You can check out any time you like, but you can never leave'"– saying it "is not only unlawful, it is reprehensible."
Since March 16, 2020, James received approximately 1,848 complaints against TSI regarding the practices of New York Sports Clubs and Lucille Roberts. Roughly, 437 of those complaints were filed on or after Sept. 1, according to the suit.
Representatives for TSI have not immediately responded to FOX Business' request for comment.