Australia’s latest raft of Covid-19 control measures have forced gyms – alongside the likes of indoor sports centres, swimming pools, co-working spaces, galleries, theatre companies and beauty salons – to close to their doors for the foreseeable future. That means their customers are faced with the dirty work of cancelling ongoing direct debits, or seeking refunds on services they have already prepaid for. If, that is, they want to.
With the country in economic crisis, deciding to pull the pin on a contract isn’t a simple equation. Cancelling a membership with a giant fitness corporation might not keep you up at night, but what if your favourite yoga studio is a small business at serious risk of going bankrupt?
One Sydney gym-goer, Josephine Parsons, says she is “completely happy” to keep paying her membership fees during the coronavirus crisis. “Our small business owners need us right now. I know I’m really lucky to still have a full-time job, so I want to do everything I can.”
She’s a member of Fortitude Fitness Merrylands, an independently owned women’s gym in the city’s western suburbs. When the lockdown measures were announced, its owner, Eliza Olds asked members to continue paying a lower fee of $10 a week so that the business could stay afloat. In exchange, she’d offer livestreamed exercise classes online. Olds says 70% of her members were happy with that arrangement – but that consumer law prevents her from charging direct debits while the business is closed.
“We’re a little community, we support each other,” she says. “[Members] are happy to keep on paying a smaller fee, my trainers were relieved they didn’t have to go line up at Centrelink … the solution that I came up with was a very good solution.”
Olds says that in lieu of the direct debit, she could ask members to transfer money to the gym’s bank account. “But it’s a very big job to ask 400 people to transfer you money,” she says. “Nobody will do it because everybody is stressed out. With direct debit, people are happy to pay because you don’t have to do anything.”
She’s trying to find a workaround. “We won’t be able to survive if we can’t … it’s a very difficult time.”
A business can’t charge you for a service they can’t reasonably provideErin Turner, Choice
“If you want to proactively support a business, you can and you should,” says Erin Turner from the consumer advocacy group Choice. “But not everyone’s going to be in that financial situation.”
If you do need to cancel, the good news is that ongoing direct debit for things like gym memberships should have already been suspended. “Under the Australian consumer law, a business can’t charge you for a service they can’t reasonably provide,” Turner says. “You can stop those payments right away.” That goes for any direct debit, not just gyms: “The joy of the Australian consumer law is that it applies to all goods and services.”
Choice reports that the major fitness franchises have already paused membership fees. But what if you’re still being direct debited for a service you can’t use? Your first step should be to contact the business. If they don’t comply with your request, Turner says you can bypass them and cancel the debit directly with your bank. “If you’re dealing with a business that’s not responding … that’s the best option.”
Things get a little trickier when it comes to refunding pre-payments – for instance, for laser hair removal sessions bought in multi-packs, 10-visit passes to pilates, or a season pass to the theatre.
“Technically, you have the right to a refund,” Turner says. “But we’re dealing with a scenario we haven’t had before. It’s a government-mandated shutdown, so the law doesn’t quite apply in the same way.”
She says businesses can choose to offer you a refund, a credit note or try to find another arrangement. In practical terms, though, a refund is harder to enforce than cancelling a direct debit. So if a business chooses not to make nice with you, there isn’t much you can do.
But most small businesses have no interest in stiffing their clientele. Right now, many are working on creative solutions to secure cash flow, while still offering something of value to their customers – like selling gift cards that can be redeemed when the coronavirus crisis is over.
In Sydney’s Surry Hills, Paramount House Hotel has banded together with 10 local bars, restaurants and cafes to create the initiative Still Local, Still Open. They’ve created special gift cards that can be spent on designated dishes, drinks and experiences at participating venues once they reopen, with proceeds from the vouchers split evenly between each business. In addition, this week saw the launch of Keep Your Cafe and LocalSpots, third-party apps that allow consumers to buy gift certificates to cafes and other small businesses. LocalSpots up and running in New South Wales, Victoria and the Australian Capital Territory, with plans to go nationwide soon.
Of course, as those who paid upfront for their gym membership or beauty treatments are now learning, a prepayment is a gesture of faith rather than an iron-clad guarantee. If those businesses go under in the months to come, customers won’t be able to redeem their gift cards.
In that scenario, admits the founder of LocalSpots, Tina Wu, “It’s something that I guess people have to see as a donation.”