Disguising price increases for members as ‘transaction fees’ and ‘payment authority fees’ cost CityFitness $1.12 million, fined for breaching the Fair Trading Act.
The District Court was told of a calculated decision made in 2023 by CityFitness senior management to recover increased business costs without disclosing increased pricing in its headline advertising.
New members signing up were not told the extra ‘transaction fee’ loaded into weekly or monthly billing would be three per cent of their membership fee.
Existing members were unilaterally charged a ‘payment authority fee,’ adding three per cent to their existing fees.
Commerce Commission investigated following complaints made by some twenty CityFitness members.
After investigation, it prosecuted CityFitness for breaching the Fair Trading Act; ‘misleading the public as to the nature or characteristic of the service provided.’
Evidence was given that the actual transaction cost on CityFitness billings was about forty cents for each credit card transaction, five cents for direct debits.
CityFitness admitted it was misleading to label its price increases as bank fees. It denied acting dishonestly.
The Commission said its conduct was deliberate, deceitful and intentional.
CityFitness’ misleading pricing lasted for sixteen months, ending April 2025.
Evidence was given that Commerce Commission put CityFitness on notice in July 2024, with CityFitness failing to correct its advertising for a further nine months.
Judge Clark increased the fine imposed by fifteen per cent as an extra penalty to mark seriousness of the offending; noting CityFitness’ current financial position and ability to pay.
CityFitness annual turnover for the 2025 year was $120 million. It holds an estimated forty per cent of the national gym membership market.
Commerce Commission v. CityFitness Group Ltd – District Court (5.06.26)
26.169