The collapse of still another Washington area health club has left consumers asking themselves this question: Do I face a significant risk of losing my money if I buy a membership in a spa?
Unfortunately, local consumer officials say yes.
"Due to the history of failures of these clubs, it is a significant risk," said Jennifer Dean, a special investigator for the Consumer Protection Commission for Prince George's County.
Dean was among the first to hear from consumers who had paid $100 to $350 for membership in Mother's Gym, a Laurel health club that suddenly closed Nov. 8, leaving an estimated 1,900 members in the lurch.
Officials estimate that about 20 Washington area health clubs have gone out of business during the past three years, including such established companies as Barbara Ellen. The cost to consumers in unused memberships is believed to be about $1.5 million.
In an effort to protect consumers from further losses, officials have called for laws requiring clubs to post bonds that could be used to provide refunds if the company folds. The first to respond was Maryland, which since July 1983 has required health spas to buy bonds of up to $50,000.
But since Mother's Gym was in compliance with that requirement, officials now have a new worry: Will the $50,000 bond be enough to cover the losses of all Mother's Gym members?
And this, officials said, should be a warning to other consumers who think that they are safe if they join a bonded club.
"Bonding was expected to protect consumers, but now we aren't sure it will," Dean said, adding that some local clubs do offer consumers a good investment for their money, "but I think they are very rare."
Dean said that consumers should be willing to spend some time and money to find out if a club is sound before spending $300 to $400 for a year's membership. "In view of all the past failures, the burden really is on the consumer to find out the condition of the company," she said.
Here's what to look for, she said:
* Has the company complied with all registration and bonding laws?
* Does the company have assets other than in its membership? If it is in a rented building furnished with leased equipment, this could be bad for consumers, because there would be no assets to liquidate in event of a failure, Dean said.
* Does the company have a good record of service in the community, based on information in local consumer office complaint files?
Dean said that consumers should ask to see the company's balance sheets before buying a membership. "If a company is in trouble, they won't want to show you anything."
Consumers who don't know how to read balance sheets in order to make a judgment should find a friend to help them, Dean said, "or hire someone to help you -- it would be worth spending $30 for an expert opinion before spending $300 or $400 for a club membership, just as you would pay a mechanic to look at a used car before you bought it."
Dean also recommended that consumers look for clubs that will allow them to buy short-term memberships rather than long-term. "Ask if you can pay every month or every three months rather than for a year," she said.
Finally, consumer officials suggest looking for alternatives to the traditional health spa.
H. Clifton Grandy, executive director of the Prince George's County consumer office, offers these possibilities: "Why not use what's available at a university, a YMCA, a recreation association. There are plenty of places like that around."