VIRGINIA ACTS OF ASSEMBLY -- CHAPTER
An Act to amend and reenact §§59.1-200, 59.1-294 through
59.1-299, 59.1-301, 59.1-302, 59.1-304 through 59.1-308.1, and 59.1-310 of the
Code of Virginia, relating to the Virginia Health Club Act.
[S 404]
Approved
Be it enacted by the General Assembly of Virginia:
1. That §§59.1-200, 59.1-294 through 59.1-299, 59.1-301,
59.1-302, 59.1-304 through 59.1-308.1, and 59.1-310 of the Code of Virginia are
amended and reenacted as follows:
§59.1-200. Prohibited practices.
A. The following fraudulent acts or practices committed by a
supplier in connection with a consumer transaction are hereby declared
unlawful:
1. Misrepresenting goods or services as those of another;
2. Misrepresenting the source, sponsorship, approval, or
certification of goods or services;
3. Misrepresenting the affiliation, connection, or association
of the supplier, or of the goods or services, with another;
4. Misrepresenting geographic origin in connection with goods
or services;
5. Misrepresenting that goods or services have certain
quantities, characteristics, ingredients, uses, or benefits;
6. Misrepresenting that goods or services are of a particular
standard, quality, grade, style, or model;
7. Advertising or offering for sale goods that are used,
secondhand, repossessed, defective, blemished, deteriorated, or reconditioned,
or that are "seconds," irregulars, imperfects, or "not first
class," without clearly and unequivocally indicating in the advertisement
or offer for sale that the goods are used, secondhand, repossessed, defective,
blemished, deteriorated, reconditioned, or are "seconds," irregulars,
imperfects or "not first class";
8. Advertising goods or services with intent not to sell them
as advertised, or with intent not to sell at the price or upon the terms
advertised.
In any action brought under this subdivision, the refusal by
any person, or any employee, agent, or servant thereof, to sell any goods or
services advertised or offered for sale at the price or upon the terms advertised
or offered, shall be prima facie evidence of a violation of this subdivision.
This paragraph shall not apply when it is clearly and conspicuously stated in
the advertisement or offer by which such goods or services are advertised or
offered for sale, that the supplier or offeror has a limited quantity or amount
of such goods or services for sale, and the supplier or offeror at the time of
such advertisement or offer did in fact have or reasonably expected to have at
least such quantity or amount for sale;
9. Making false or misleading statements of fact concerning
the reasons for, existence of, or amounts of price reductions;
10. Misrepresenting that repairs, alterations, modifications,
or services have been performed or parts installed;
11. Misrepresenting by the use of any written or documentary
material that appears to be an invoice or bill for merchandise or services
previously ordered;
12. Notwithstanding any other provision of law, using in any
manner the words "wholesale," "wholesaler," "factory,"
or "manufacturer" in the supplier's name, or to describe the nature
of the supplier's business, unless the supplier is actually engaged primarily
in selling at wholesale or in manufacturing the goods or services advertised or
offered for sale;
13. Using in any contract or lease any liquidated damage
clause, penalty clause, or waiver of defense, or attempting to collect any
liquidated damages or penalties under any clause, waiver, damages, or penalties
that are void or unenforceable under any otherwise applicable laws of the
Commonwealth, or under federal statutes or regulations;
14. Using any other deception, fraud, false pretense, false
promise, or misrepresentation in connection with a consumer transaction;
15. Violating any provision of §3.2-6512, 3.2-6513, or
3.2-6516, relating to the sale of certain animals by pet dealers which is
described in such sections, is a violation of this chapter;
16. Failing to disclose all conditions, charges, or fees
relating to:
a. The return of goods for refund, exchange, or credit. Such
disclosure shall be by means of a sign attached to the goods, or placed in a
conspicuous public area of the premises of the supplier, so as to be readily
noticeable and readable by the person obtaining the goods from the supplier. If
the supplier does not permit a refund, exchange, or credit for return, he shall
so state on a similar sign. The provisions of this subdivision shall not apply
to any retail merchant who has a policy of providing, for a period of not less
than 20 days after date of purchase, a cash refund or credit to the purchaser's
credit card account for the return of defective, unused, or undamaged
merchandise upon presentation of proof of purchase. In the case of merchandise
paid for by check, the purchase shall be treated as a cash purchase and any
refund may be delayed for a period of 10 banking days to allow for the check to
clear. This subdivision does not apply to sale merchandise that is obviously
distressed, out of date, post season, or otherwise reduced for clearance; nor
does this subdivision apply to special order purchases where the purchaser has
requested the supplier to order merchandise of a specific or unusual size,
color, or brand not ordinarily carried in the store or the store's catalog; nor
shall this subdivision apply in connection with a transaction for the sale or
lease of motor vehicles, farm tractors, or motorcycles as defined in §
46.2-100;
b. A layaway agreement. Such disclosure shall be furnished to
the consumer (i) in writing at the time of the layaway agreement, or (ii) by
means of a sign placed in a conspicuous public area of the premises of the
supplier, so as to be readily noticeable and readable by the consumer, or (iii)
on the bill of sale. Disclosure shall include the conditions, charges, or fees
in the event that a consumer breaches the agreement;
16a. Failing to provide written notice to a consumer of an
existing open-end credit balance in excess of $5 (i) on an account maintained
by the supplier and (ii) resulting from such consumer's overpayment on such
account. Suppliers shall give consumers written notice of such credit balances
within 60 days of receiving overpayments. If the credit balance information is
incorporated into statements of account furnished consumers by suppliers within
such 60-day period, no separate or additional notice is required;
17. If a supplier enters into a written agreement with a
consumer to resolve a dispute that arises in connection with a consumer
transaction, failing to adhere to the terms and conditions of such an
agreement;
18. Violating any provision of the Virginia Health Spa
Club Act, Chapter 24 (§59.1-294 et seq.) of this title;
19. Violating any provision of the Virginia Home Solicitation
Sales Act, Chapter 2.1 (§59.1-21.1 et seq.) of this title;
20. Violating any provision of the Automobile Repair
Facilities Act, Chapter 17.1 (§59.1-207.1 et seq.) of this title;
21. Violating any provision of the Virginia Lease-Purchase
Agreement Act, Chapter 17.4 (§59.1-207.17 et seq.) of this title;
22. Violating any provision of the Prizes and Gifts Act,
Chapter 31 (§59.1-415 et seq.) of this title;
23. Violating any provision of the Virginia Public Telephone
Information Act, Chapter 32 (§59.1-424 et seq.) of this title;
24. Violating any provision of §54.1-1505;
25. Violating any provision of the Motor Vehicle
Manufacturers' Warranty Adjustment Act, Chapter 17.6 (§59.1-207.34 et seq.) of
this title;
26. Violating any provision of §3.2-5627, relating to the
pricing of merchandise;
27. Violating any provision of the Pay-Per-Call Services Act,
Chapter 33 (§59.1-429 et seq.) of this title;
28. Violating any provision of the Extended Service Contract
Act, Chapter 34 (§59.1-435 et seq.) of this title;
29. Violating any provision of the Virginia Membership Camping
Act, Chapter 25 (§59.1-311 et seq.) of this title;
30. Violating any provision of the Comparison Price
Advertising Act, Chapter 17.7 (§59.1-207.40 et seq.) of this title;
31. Violating any provision of the Virginia Travel Club Act,
Chapter 36 (§59.1-445 et seq.) of this title;
32. Violating any provision of §§46.2-1231 and 46.2-1233.1;
33. Violating any provision of Chapter 40 (§54.1-4000 et
seq.) of Title 54.1;
34. Violating any provision of Chapter 10.1 (§58.1-1031 et
seq.) of Title 58.1;
35. Using the consumer's social security number as the
consumer's account number with the supplier, if the consumer has requested in
writing that the supplier use an alternate number not associated with the
consumer's social security number;
36. Violating any provision of Chapter 18 (§6.2-1800 et seq.)
of Title 6.2;
37. Violating any provision of §8.01-40.2;
38. Violating any provision of Article 7 (§32.1-212 et seq.)
of Chapter 6 of Title 32.1;
39. Violating any provision of Chapter 34.1 (§59.1-441.1 et
seq.) of this title;
40. Violating any provision of Chapter 20 (§6.2-2000 et seq.)
of Title 6.2;
41. Violating any provision of the Virginia Post-Disaster
Anti-Price Gouging Act, Chapter 46 (§59.1-525 et seq.) of this title;
42. Violating any provision of Chapter 47 (§59.1-530 et seq.)
of this title;
43. Violating any provision of §59.1-443.2;
44. Violating any provision of Chapter 48 (§59.1-533 et seq.)
of this title;
45. Violating any provision of Chapter 25 (§6.2-2500 et seq.)
of Title 6.2;
46. Violating the provisions of clause (i) of subsection B of
§54.1-1115;
47. Violating any provision of §18.2-239;
48. Violating any provision of Chapter 26 (§59.1-336 et
seq.);
49. Selling, offering for sale, or manufacturing for sale a
children's product the supplier knows or has reason to know was recalled by the
U.S. Consumer Product Safety Commission. There is a rebuttable presumption that
a supplier has reason to know a children's product was recalled if notice of
the recall has been posted continuously at least 30 days before the sale, offer
for sale, or manufacturing for sale on the website of the U.S. Consumer Product
Safety Commission. This prohibition does not apply to children's products that
are used, secondhand or "seconds";
50. Violating any provision of Chapter 44.1 (§59.1-518.1 et
seq.) of this title;
51. Violating any provision of Chapter 22 (§6.2-2200 et seq.)
of Title 6.2;
52. Violating any provision of §8.2-317.1; and
53. Selling, offering for sale, or using in the construction,
remodeling, or repair of any residential dwelling in the Commonwealth, any
drywall that the supplier knows or has reason to know is defective drywall.
This subdivision shall not apply to the sale or offering for sale of any
building or structure in which defective drywall has been permanently installed
or affixed.
B. Nothing in this section shall be construed to invalidate or
make unenforceable any contract or lease solely by reason of the failure of
such contract or lease to comply with any other law of the Commonwealth or any
federal statute or regulation, to the extent such other law, statute, or
regulation provides that a violation of such law, statute, or regulation shall
not invalidate or make unenforceable such contract or lease.
CHAPTER 24.
VIRGINIA HEALTH SPA CLUB ACT.
§59.1-294. Short title.
This chapter shall be known and may be cited as the
"Virginia Health Spa Club Act."
§59.1-295. Statement of purpose.
The purpose of this chapter is to safeguard the public
interest against fraud, deceit, and financial hardship, and to foster and
encourage competition, fair dealing and prosperity in the field of health
spa club services by prohibiting false and misleading advertising,
and dishonest, deceptive, and unscrupulous practices by which the public has
been injured in connection with contracts for health spa club
services.
§59.1-296. Definitions.
As used in this chapter:
"Business day" means any day except a Sunday or a
legal holiday.
"Buyer" means a natural person who enters into a
health spa club contract.
"Commissioner" means the Commissioner of Agriculture
and Consumer Services, or a member of his staff to whom he may delegate his
duties under this chapter.
"Comparable alternate facility" means a health
spa club facility that is reasonably of like kind, in nature and
quality, to the health spa club facility originally contracted,
whether such facility is in the same location but owned or operated by a
different health spa club or is at another location of the same
health spa club.
"Contract price" means the sum of the initiation
fee, if any, and all monthly fees except interest required by the health spa
club contract.
"Facility" means a location where health spa
club services are offered as designated in a health spa club
contract.
"Health spa club" means any person,
firm, corporation, organization, club or association whose primary purpose is
to engage in the sale of memberships in a program consisting primarily of
physical exercise with exercise machines or devices, or whose primary purpose
is to engage in the sale of the right or privilege to use exercise machines or
devices. The term "health spa club" shall not include
the following: (i) bona fide nonprofit organizations, including, but not
limited to, the Young Men's Christian Association, Young Women's Christian
Association, or similar organizations whose functions as health spas
clubs are only incidental to their overall functions and purposes; (ii) any
private club owned and operated by its members; (iii) any organization
primarily operated for the purpose of teaching a particular form of
self-defense such as judo or karate; (iv) any facility owned or operated by the
United States; (v) any facility owned or operated by the Commonwealth of
Virginia or any of its political subdivisions; (vi) any nonprofit public or
private school, college or university; (vii) any club providing tennis or
swimming facilities located in a residential planned community or subdivision,
developed in conjunction with the development of such community or subdivision,
and deriving at least 80 percent of its membership from residents of such
community or subdivision; and (viii) any facility owned and operated by a
private employer exclusively for the benefit of its employees, retirees, and
family members and which facility is only incidental to the overall functions
and purposes of the employer's business and is operated on a nonprofit basis.
"Health spa club contract" means an
agreement whereby the buyer of health spa club services
purchases, or becomes obligated to purchase, health spa club
services.
"Health spa club services" means and
includes services, privileges, or rights offered for sale or provided by a
health spa club.
"Initiation fee" means a nonrecurring fee charged at
or near the beginning of a health spa club membership, and
includes all fees or charges not part of the monthly fee.
"Monthly fee" means the total consideration,
including but not limited to, equipment or locker rental, credit check,
finance, medical and dietary evaluation, class and training fees, and all other
similar fees or charges and interest, but excluding any initiation fee, to be
paid by a buyer, divided by the total number of months of health spa
club service use allowed by the buyer's contract, including months or time
periods called "free" or "bonus" months or time periods and
such months or time periods which that are described in any other
terms suggesting that they are provided free of charge, which months or time
periods are given or contemplated when the contract is initially executed.
"Out of business" means the status of a facility
that is permanently closed and for which there is no comparable alternate
facility.
"Prepayment" means payment of any consideration for
services or the use of facilities made prior to the day on which the services
or facilities of the health spa club are fully open and available
for regular use by the members.
"Relocation" means the provision of health spa
club services by the health spa club that entered into the
membership contract at a location other than that designated in the member's
contract.
§59.1-296.1. Registration; fees.
A. It shall be unlawful for any health spa club
to offer, advertise, or execute or cause to be executed by the buyer any health
spa club contract in this Commonwealth unless each facility of the
health spa club has been properly registered with the
Commissioner at the time of the offer, advertisement, sale or execution of a
health spa club contract. The registration shall (i) disclose the
address, ownership, date of first sales and date of first opening of the facility
and such other information as the Commissioner may require consistent with the
purposes of this chapter, (ii) be renewed annually on July 1, and (iii) be
accompanied by the appropriate registration fee per each annual registration in
the amount indicated below:
Number of unexpired Registration fee
contracts originally written
for more than one month
0 to 250 $200
251 to 500 $300
501 to 2000 $700
2001 or more $800
Further, it shall be accompanied by a late fee of $50 if the
registration renewal is neither postmarked nor received on or before July 1. In
the event that a spa club operates multiple facilities, a $50
late fee for the first facility and $25 for each additional facility shall
accompany the registrations. For each successive 30 days after August 1, an
additional $25 shall be added for each facility. Each separate facility where
health spa club services are offered shall be considered a
separate facility and shall file a separate registration, even though the
separate facilities are owned or operated by the same health spa club.
B. Any health spa which club that sells a health
spa club contract prior to registering pursuant to this section and,
if required, submits the appropriate surety required by §59.1-306 shall pay a
late filing fee of $100 for each 30-day period the registration or surety is
late. This fee shall be in addition to all other penalties allowed by law.
C. A registration shall be amended within 21 days if there is
a change in the information included in the registration.
D. All fees shall be remitted to the State Treasurer and shall
be placed to the credit and special fund of the Virginia Department of
Agriculture and Consumer Services to be used in the administration of this
chapter.
§59.1-296.2. Contracts sold on prepayment basis.
A. Each health spa club selling contracts or
health spa club services on a prepayment basis shall notify the
Commissioner of the proposed facility for which prepayments will be solicited
and shall deposit all funds received from such prepayment contracts in an
account established in a financial institution authorized to transact business in
the Commonwealth until the health spa club has commenced
operations in the facility and the facility has remained open for a period of
30 days. The account shall be established and maintained only in a financial
institution which that agrees in writing with the Commissioner to
hold all funds deposited and not to release such funds until receipt of written
authorization from the Commissioner. The prepayment funds deposited will be
eligible for withdrawal by the health spa club after the facility
has been open and providing services pursuant to its health spa club
contracts for 30 days and the Commissioner gives written authorization for
withdrawal.
B. The provisions of this section shall not apply to any
facility duly registered pursuant to the provisions of §59.1-296.1 for which a
bond or letter of credit in the amount of $100,000 has been posted.
§59.1-296.2:1. Prepayment contracts; prohibited practices;
relocation; refund.
A. No health spa club shall sell a health spa
club contract on a prepayment basis without disclosing in the contract the
date on which the facility shall open. The opening date shall not be later than
12 months from the signing of the contract.
B. No health spa club shall close or relocate
any facility without first giving notice to the Commissioner and conspicuously
posting a notice both within and outside each entrance to the facility being
closed or relocated of the closing or relocation date. Such notice shall be
provided at least 30 days prior to the closing or relocation date. If a
relocation is to occur, the Commissioner and the facility's members shall be
provided with the address of the specific new facility at the time of this
notice.
C. No health spa club shall knowingly and
willfully make any false statement in any registration application, statement,
report, or other disclosure required by this chapter.
D. No health spa club shall refuse or fail,
after notice from the Commissioner, to produce for the Commissioner's review
any of the health spa's club's books or records required to be
maintained by this chapter.
E. Unless it so discloses fully in 10-point bold-faced type or
larger on the face of each health spa club contract, no health
spa club shall sell any health spa club contract if
any owner of the health spa club, regardless of the extent of his
ownership, previously owned in whole or in part a health spa club
that closed for business any facility and failed to:
1. Refund all moneys due to holders of health spa
club contracts; or
2. Provide comparable alternate facilities with another health
spa club that agreed in writing to honor all provisions of the
health spa club contracts or at another facility operated by the
originally contracting health spa club.
F. No health spa club that has failed to provide
the Commissioner the appropriate surety pursuant to §59.1-306 shall sell a
health spa club contract unless that contract contains a
statement that reads as follows: "This spa club is not
permitted, pursuant to the Virginia Health Spa Club Act, to
accept any initiation fee in excess of $125 or any payment for more than the
prorated monthly fee for the month when the contract is initially executed plus
one full month in advance."
Such disclosure shall be printed in 10-point bold-faced type
or larger on the face of each contract.
§59.1-296.3. Initiation fees.
Whenever a refund is due a buyer, any initiation fee charged
by a health spa club shall be prorated over the life of the
contract or twelve 12 months, whichever is greater.
§59.1-297. Right of cancellation.
A. Every health spa club contract for the sale
of health spa club services may be cancelled under the following
circumstances:
1. A buyer may cancel the contract without penalty within
three business days of its making and, upon notice to the health spa
club of the buyer's intent to cancel, shall be entitled to receive a refund
of all moneys paid under the contract.
2. A buyer may cancel the contract if the facility relocates
or goes out of business and the health spa club fails to provide
comparable alternate facilities within five driving miles of the location
designated in the health spa club contract. Upon receipt of
notice of the buyer's intent to cancel, the health spa club shall
refund to the buyer funds paid or accepted in payment of the contract in an
amount computed as prescribed in §59.1-297.1.
3. The contract may be cancelled if the buyer dies or becomes
physically unable to use a substantial portion of the services for 30 or more
consecutive days. If the buyer becomes physically unable to use a substantial
portion of the services for 30 or more consecutive days and wishes to cancel
his contract, he must provide the health spa club with a signed
statement from his doctor, physician assistant, or nurse practitioner verifying
that he is physically unable to use a substantial portion of the health spa
club services for 30 or more consecutive days. Upon receipt of notice of
the buyer's intent to cancel, the health spa club shall refund to
the buyer funds paid or accepted in payment of the contract in an amount
computed as prescribed in §59.1-297.1. In the case of disability, the health
spa club may require the buyer to submit to a physical examination
by a doctor, physician assistant, or nurse practitioner agreeable to the buyer
and the health spa club within 30 days of receipt of notice of
the buyer's intent to cancel. The cost of the examination shall be borne by the
health spa club.
B. The buyer shall notify the health spa club of
cancellation in writing, by certified mail, return receipt requested, or
personal delivery, to the address of the health spa club as
specified in the health spa club contract.
C. If the customer has executed any credit or lien agreement
with the health spa club or its representatives or agents to pay
for all or part of health spa club services, any such negotiable
instrument executed by the buyer shall be returned to the buyer within 30 days
after such cancellation.
D. If the spa club agrees to allow a consumer to
cancel for any other reason not outlined in this section, upon receipt of
notice of cancellation by the buyer, the health spa club shall
refund to the buyer funds paid or accepted in payment of the contract in an
amount computed as prescribed in §59.1-297.1.
§59.1-297.1. Payment and calculation of refunds.
A. All refunds for cancellation of membership shall be paid
within 30 days of the health spa's club's receipt of written
notice of cancellation by the buyer and calculated by:
1. Dividing the contract price by the term of the contract in
days;
2. Multiplying the number obtained in subdivision 1 by the
number of days between the effective date of the contract and the date of
cancellation; and
3. Subtracting the number obtained in subdivision 2 from the
total price paid on the health spa club contract.
B. In the event of the health spa club going out
of business, the date of cancellation shall be the date the health spa
club ceased providing health spa club services at the facility.
C. A health spa club issuing a refund to a buyer
under this chapter shall do so within 30 days of the health spa club
receiving a notice of cancellation pursuant to §59.1-297, or within 30 days of
the permanent closing of the facility designated in the buyer's contract.
§59.1-297.2. Automatic termination of a health club contract.
A health spa club contract shall be considered
terminated automatically if the designated facility closes permanently and the
health spa club does not provide a comparable alternate facility.
A facility closes temporarily if it closes for a reasonable period of time (i)
for renovations to all or a portion of the facility, (ii) because the lease for
the facility has been canceled, or (iii) because of a fire, or a flood or other
act of God, or other cause not within the reasonable control of the health
spa club. If a facility closes temporarily, it shall within 14 days
from the time of the temporary closing provide notice of the date it expects to
reopen, which date shall be within a reasonable period of time from the time
the facility temporarily closes, to the Commissioner and shall conspicuously
post such notice both within and outside each entrance to the facility.
§59.1-298. Notice to buyer.
A copy of the executed health spa club contract
shall be delivered to the buyer at the time the contract is executed. All
health spa club contracts shall (i) be in writing, (ii) state
the name and physical address of the health club, (iii) be signed by the
buyer, (iii) (iv) designate the date on which the buyer actually
signed the contract, (iv) (v) state the starting and expiration
dates of the initial membership period, (v) (vi) separately
identify any initiation fee, (vi) (vii) either in the contract
itself or in a separate notice provided to the buyer at the time the contract
is executed, notify each buyer that the buyer should attempt to resolve with
the health spa club any complaint the buyer has with the health
spa club, and that the Virginia Department of Agriculture and Consumer
Services regulates health spas clubs in the Commonwealth pursuant
to the provisions of the Virginia Health Spa Club Act, and
(vii) (viii) contain the provisions set forth in §59.1-297 under a
conspicuous caption: "BUYER'S RIGHT TO CANCEL" that shall read
substantially as follows:
If you wish to cancel this contract, you may cancel by making
or delivering written notice to this health spa club. The notice
must say that you do not wish to be bound by the contract and must be delivered
or mailed before midnight of the third business day after you sign this
contract. The notice must be delivered or mailed to . . . . . . . . . . . .
(Health spa club shall insert its name and
mailing address.)
If canceled within three business days, you will be entitled
to a refund of all moneys paid. You may also cancel this contract if this
spa club goes out of business or relocates and fails to provide
comparable alternate facilities within five driving miles of the facility
designated in this contract. You may also cancel if you become physically
unable to use a substantial portion of the health spa club
services for 30 or more consecutive days, and your estate may cancel in the
event of your death. You must prove you are unable to use a substantial portion
of the health spa club services by a doctor's, physician
assistant's, or nurse practitioner's certificate, and the health spa
club may also require that you submit to a physical examination, within 30
days of the notice of cancellation, by a doctor, physician assistant, or nurse
practitioner agreeable to you and the health spa club. If you
cancel after the three business days, the health spa club may
retain or collect a portion of the contract price equal to the proportionate
value of the services or use of facilities you have already received. Any
refund due to you shall be paid within 30 days of the effective date of
cancellation.
§59.1-299. Duration of contract.
No health spa club contract shall have a
duration for a period longer than thirty-six months, including any renewal
period; however, a health spa club contract may exceed
thirty-six 36 months provided that:
1. Any initiation fee does not exceed ten 10
times the initial monthly fee;
2. All payments for health spa club services,
other than the initiation fee, are collected as monthly fees on a monthly
basis;
3. After an initial term of not more than twelve 12
months, either party may cancel the health spa club contract upon
not more than thirty 30 days' notice; and
4. The monthly fee is never reduced below eighty 80
percent of the monthly fee at the time the contract is initially executed.
§59.1-301. Noncomplying contract voidable.
Any health spa club contract which
that does not comply with the applicable provisions of this chapter shall
be voidable at the option of the buyer.
§59.1-302. Fraud rendering contract void.
Any health spa club contract entered into by the
buyer upon any false or misleading information, representation, notice,
or advertisement of the health spa club or the health spa's
club's agents shall be void and unenforceable.
§59.1-304. Notice of preservation of buyers' rights.
All health spa club contracts and any promissory
note executed by the buyer in connection therewith shall contain the following
provision on the face thereof in at least ten 10-point, boldface
type: NOTICE
ANY HOLDER OF THIS CONTRACT OR NOTE IS SUBJECT TO ALL CLAIMS
AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR
SERVICES OBTAINED WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR
SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER.
§59.1-305. Prohibition against assignment of health club
contract cutting off buyer's right of action or defense against seller;
conditions.
Whether or not the health spa club has complied
with the notice requirements of §59.1-304, any right of action or defense
arising out of a health spa club contract which the buyer has
against the health spa club, and which would be cut off by
assignment, shall not be cut off by assignment of the contract to any third
party holder, whether or not the holder acquires the contract in good faith and
for value.
§59.1-306. Bond or letter of credit required; exception.
A. Every health spa club, before it enters into
a health spa club contract and accepts any moneys in excess of
the prorated monthly fee for the month when the contract is initially executed
plus one month's fees or accepts any initiation fee in excess of $125, shall
file and maintain with the Commissioner, in form and substance satisfactory to
him, a bond with corporate surety, from a company authorized to transact
business in the Commonwealth or a letter of credit from a bank insured by the
Federal Deposit Insurance Corporation in the amounts indicated below:
Number of Amount of bond
applicable contracts or letter of
credit
0 to 250 $10,000
251 to 500 $20,000
501 to 750 $30,000
751 to 1000 $40,000
1001 to 1250 $50,000
1251 to 1500 $60,000
1501 to 1750 $70,000
1751 to 2000 $80,000
2001 or more $100,000
For purposes of calculating the number of applicable unexpired
health spa club contracts when determining the required amount of
bond or letter of credit, health spa club contracts entered into
on or after January 1, 2005, with a term that exceeds 13 months shall be
counted as multiple health spa club contracts, such that the
number of applicable contracts counted with respect thereto shall equal the
total of the number of full years and any partial year in its term. However,
this paragraph shall not apply (i) to health spa club contracts
that are payable only on a monthly basis and for which the initiation fee is no
more than $250, or (ii) if the number of the health spa's
club's contracts in effect with a term that exceeds 13 months is less than
10 percent of the total of its health spa club contracts.
The number of applicable unexpired contracts shall be
separately calculated for each facility.
A health spa club shall file a separate bond or
letter of credit with respect to each separate facility, even though the
separate facilities are owned or operated by the same health spa club.
However, no health spa club shall be required to
file with the Commissioner bonds or letters of credit in excess of $300,000. If
the $300,000 limit is applicable, then the bonds or letters of credit filed by
the health spa club shall apply to all facilities owned or
operated by the same health spa club.
B. A health spa club may sell health spa
club contracts of up to 36 months' duration for a facility for which a
health spa club has not filed a bond or letter of credit so long
as the amount of payment actually charged, due or received under the health
spa club contracts each month by the health spa club
or any holder thereunder does not exceed the monthly fee calculated pursuant to
the definition thereof in §59.1-296, with the exception that the payment
actually charged may include a maximum initiation fee of $125 for health spa
club contracts of 13 months or more in duration.
§59.1-307. Bond or letter of credit; persons protected.
A. The bond or letter of credit required by §59.1-306 shall
be in favor of the Commonwealth for the benefit of (i) any buyer injured by
having paid money for health spa club services in a facility
which that fails to open by the date provided by the contract, which
date shall not be in excess of twelve 12 months from the signing
of the contract; (ii) any buyer injured by having paid money for health spa
club services in a facility which goes out of business prior to the
expiration of the buyer's health spa club contract; or (iii) any
buyer injured as a result of a violation of this chapter.
B. The aggregate liability of the bond or letter of credit to
all persons for all breaches of the conditions of the bond or letter of credit
shall in no event exceed the amount of the bond or letter of credit. The bond
or letter of credit shall not be cancelled or terminated except with the
consent of the Commissioner.
§59.1-308. Change in ownership of health club.
For purposes of this chapter, a health spa club
shall be considered a new health spa club and subject to the
requirements of a bond or letter of credit at the time the health spa
club changes ownership. Any health spa which club that has
more than fifty 50 percent ownership by the same
stockholder(s) and/or partner(s) person or persons shall be
considered as owned by the same owner. A change in ownership shall not release,
cancel, or terminate liability under any bond or letter of credit
previously filed unless the Commissioner agrees in writing to such release,
cancellation, or termination because the new owner has filed a new bond
or letter of credit for the benefit of the previous owner's members or because
the former owner has refunded all unearned payments to its members. Every
change in ownership shall be reported in writing to the Commissioner at least
ten 10 days prior to the effective date of the change in ownership.
§59.1-308.1. Production of records.
Every health spa club, upon the written request
of the Commissioner, shall make available to the Commissioner its prepayment
bank account records and all membership contracts for inspection and copying,
to enable the Commissioner reasonably to determine compliance with this
chapter. Every health spa club shall maintain a true copy of each
health spa club contract executed between the health spa
club and a buyer. Each contract shall be maintained for its term, including
any renewal. Every health spa club shall maintain the executed
health spa club contracts at a designated location where the
contracts may be inspected by the Commissioner. If the location designated by
the health spa club is outside Virginia, the health spa
club shall pay the reasonable travel costs of an inspection by the
Commissioner.
§59.1-310. Applicability.
Sections 59.1-297, 59.1-298, 59.1-299, 59.1-304, and
59.1-305 shall not apply to health spa club contracts entered
into before the effective date of this chapter September 15, 2004.
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