Business Advisor

Important Information Regarding Recurring Payments and COVID-19

Some states enacted certain clauses of the Health Club Act that affect how your gym or fitness studio can collect revenue. Here's what you need to know.

As COVID-19 has upended our usual way of life, businesses like gyms and fitness studios have stepped up magnificently to the challenge of taking class offerings online. It has allowed studios that have traditionally relied on in-person client interaction to stay open for business despite social distancing measures. 

However, there is growing concern from the Attorneys General in various states regarding the collection of money for services that are no longer available. Even though businesses are offering virtual sessions, the agreed-to services for active memberships was for in-person training.

Due to this, several U.S. states–and we expect more will follow–have enacted certain clauses of the Health Club Act that directly affect how your gym or fitness studio can collect payments. We have compiled a list of state-specific resource portals for you to research how your business specifically is affected. Below we’ve posted the main things you need to know:

Waivers Covering Virtual Classes

Since the waivers clients initially signed were for in-person services, it is important for business owners to work with their legal counsel and add verbiage regarding virtual service offerings. For more information on liability waivers, go here.

What you need to do: Delete your waiver within Pike13 and recreate it. Your clients will be prompted to sign the new waiver when they log into Pike13 again. The original waiver will remain on the client's profile under signed documents.

Special Plans

Maryland has imposed new payment collection requirements during these mandated closures. Businesses may not continue charging clients on their existing plan that covers in-person services. They must provide the client with an option to opt into a new plan for virtual/online services instead.

Check with your local state legislation to see whether this applies to your business.

What you need to do: Depending on state requirements, you may have to create plans specific to virtual classes/appointments with pricing that reflects the value. 

Notifying Clients

We recommend communicating payment options to clients regardless of whether your state/region is currently impacted as best practice. We anticipate more requirements coming around the globe in an effort to protect consumers. 

What you need to do: Pike13 is providing an email template that you can use to communicate the new pricing policies to your clients. We recommend you reach out to your client base with options you’ve made available that suit your business needs.

Cancellations, Holds & Refunds

This only applies to businesses in the health club sector, as specified by the Health Club Act for your state. Business owners should process requests for cancellations, holds, and refunds when asked to do so by the client. Fees should not be enforced during the mandated closures due to COVID-19.

While standard policy may require such requests in writing, it is best practice to accept requests verbally. We recommend following up via email once you have processed their request to keep for your records.

What you need to do: Any request for accommodation to cancel or pause a membership or provide a refund should be processed immediately. 

Collecting Donations

In most cases, donations need to be recorded as revenue. If you want to continue collecting money during your closure, it is highly recommended you speak with an accountant to ensure you are taking the proper steps. It is also important to avoid using the term ‘donation’ when collecting money as your clients may feel there is a tax deduction when there is not.

What you need to do: Avoid using the word ‘donation’ in your client communications unless you are set up to receive them. Reach out to your accountant or bank for steps you need to take to be eligible for collecting donations.

We’re keeping track of new policies so we can pass the most important information on to you. You can keep track of Health Club Act updates on our Recurring Payments and COVID-19 resource page

Similar posts

The Pike13 Blog

At Pike13, we're passionate about helping fitness business owners succeed. Our innovative software solutions empower businesses of all sizes to streamline their operations and grow their customer base. Whether you're a small boutique studio or a large gym chain, our platform is designed to help you manage your business more efficiently and effectively.