The health-spa industry is riddled with "widespread consumer abuses that warrant government regulation," according to a report issued yesterday by the Federal Trade Commission.
FTC official Roger Fitzpatrick, the report's author, claims the report documents "the presence of a persistent, nagging and widespread pattern of abuses engaged in by a wide range of spa facilities" that is so overwhelming as to raise the question: "How do spas expect to stay in business with so many dissatisfied customers?"
Built on the record of hearings over the past two years in Atlanta, San Francisco and New York, and an earlier FTC staff proposal for new trade regulations to govern the spa industry, the report released yesterday cited such alleged abuses as:
Misleading, false and deceptive advertising and sales representations.
Unsatisfactory instructors and overcrowded facilities.
Use of high-pressure sales tactics.
Restrictive and unfair cancellation policies.
The failure of new spas to open as promised and the closing of many spas without the fulfillment of long-term advance-payment contracts with customers.
"The evidence accumulated during this rulemaking proceeding is sufficient to establish in a convincing manner the existence of the unfair trade practices," Fitzpatrick said yesterday, "and it is a clear indication of conduct sufficient to warrant regulatory attention and action by this agency."
The Association of Physical Fitness Centers, an industry group representing a segment of the estimated 4,000 spas serving some 2 million customers, labeled the FTC report "a kangaroo court."
"They issue the rule and get an employee of the agency to preside over the hearings. It obviously is going to be aimed at backing up the complaint," said APFC executive director Jimmy Johnson.
"The presiding officer has overdramatized this business of consumer complaints," Johnson added. "The Better Business Bureau rates us in the bottom third of all industries as to number of complaints. These wide-spread consumer abuses that are reported here are partially the result of the staff report that was based on data that occurred in the mid-1960s'."
Some alleged abuses were cited in the report.
In one case, a District spa tried to force a consumer who suffered a knee injury to continue payments on his contract through dunning letters and phone harrassment.
In another instance of a spa member being injured at the spa, the spa turned her contract over to a collection agency when she wouldn't pay for the remainder of the contract she could not make use of.
Another customer continued to receive Master Charge bills for her contract to a spa that had already closed down.
An Oregon spa sold $1.8 million in contracts over two years and then declared bankruptcy, while a New Jersey spa closed leaving one woman with more than three and a half years left on a four-year contract, and no rebate.
And a man in Indiana said he suffered a stroke, only days after he was given a longer lesson on a exercise machine than he should have had. The spa refused to cancel his contract.
The report calls for regulations similar to those proposed by the FTC staff in 1975, including the call for a provision that would allow dissatisfied spa consumers to get out of their contracts with some rebate any time before it expires.
The report conceded that regulation could end up increasing the price of spa services to consumers, and make it more difficult for spa operators to get started, but contended that such consumer protection statutes would ultimately give the consumers better chance for a fair deal.