This gym’s billing policies called unethical, possibly illegal

This gym’s billing policies called unethical, possibly illegal.

EP Fitness has eight locations throughout El Paso, and advertises itself as the No. 1 choice in the city. But a former employee sat down with KFOX14 to explain what he says happens behind the scenes at the gym.

He asked we don’t use his name, so we will call him “Hector” for the purpose of this story.

“This is the largest gym in El Paso, and they’re hurting and screwing over tons of people,” he said.

Hector worked at EP Fitness’ Paragon location until he left this summer. During his time there, he said he was ordered to change members’ credit card information while processing payment.

“They had asked us to do something that I thought was unethical,” he said. “If the credit card was expired, add two years to the expiration date.”

EP Fitness (Flex Enterprises) President Mario Durand declined an on-camera interview about the allegation, but responded to it in a phone call with KFOX14.

“Well it’s 100 percent true,” Durand said. “We update credit card numbers, many companies do, if you’re lucky enough to be with a company that updates expiration dates it really saves people a lot of hassle.”

We asked Durand to explain how the practice is beneficial to the consumer.

“If we didn’t update expiration dates, those payments would bounce, and as to the purchase agreement, they would owe us a $5 late fee, and a $25 declined card fee,” he said. “So every time we do this, we actually save somebody $30, so I don’t know why it’s a big deal.”

But Hector disagrees, and claims some customers were overcharged because of this policy.

“I had several calls and complaints of people being charged more than once,” he said.

He said that’s because according to EP Fitness’ contract, which KFOX14 obtained, customers agree to allow their accounts to be drafted several times if a credit card fee is declined.

But is the practice of altering customer credit cards even legal?

Local attorney Justin Underwood says based off of his reading of the Texas Penal Code, it is not.

“Under Section 32.21, credit card abuse, it blatantly says  that a person commits an offense if ‘with intent to obtain a benefit fraudulently, he presents or uses a debit or credit card with knowledge that the card has expired, or has been revoked or cancelled,’” Underwood said.

The penal code lists the offense as a state jail felony.

“You know [Durand] has knowledge that the cards are expired, he told you he’s ordering his employees to extend them,” Underwood said. “To extend the expiration dates, you can’t say he doesn’t have knowledge, but that might be for their civil attorney to answer.”

KFOX14 reached out to EP Fitness’ attorney, Stuart R. Schwartz, for a response.
In a statement, he told us the following:

“EP Fitness contracts with an outside billing provider to handle its membership account billing. Nevertheless, let me specifically address your baseless suggestion that somehow the method used to handle monthly recurring charges violates the Texas Penal Code. Tex. Penal Code, Sec. 32.31 clearly does not apply to EP Fitness.  That provision plainly states that a person commits an offense if he/she presents or uses the card with ‘intent to obtain a benefit fraudulently’ ‘with knowledge that: (B) the card has expired, or has been revoked or cancelled.’  This code provision applies when a cardholder or other person seeks to purchase goods or services, such as clothing or a meal at a restaurant, with a credit card they know has expired or has been revoked or cancelled.  As for EP Fitness, it is the member himself that contractually permits his credit card to be used to facilitate the payment of his monthly membership dues so as to not disrupt his enjoyment of the gyms, not the other way around.  There is nothing i llegal about updating a member’s expiration date. Many consumers, including our members, prefer to use’recurring billing.’ The ability of an individual to pay for a service automatically is desirable, ensuring continuity of service.  In fact, they contractually authorize EP Fitness to initiate withdrawal entries to their credit card.  Permitting payment by means of a recurring charge assures that their account does not become delinquent and avoids imposing credit card chargebacks, default charges, and late charges (which could total as much as $30.00 per month) onto the member’s account. The contract further provides that it is the member’s responsibility to inform EP Fitness in writing that the member no longer wishes to have the recurring charges posted to their credit card. Absent such notice, the member contractually grants EP Fitness ‘authorization’ to continue to post the charge to the credit card until such time as notification is received.  When a member wishes to ‘revoke’ or ‘cancel’ the use of the c ard, they so inform EP Fitness, which always honors the request.  And if the charge clears, it certainly has not ‘expired.’  And, of course, a member can dispute a charge through his or her credit card company or issuing bank, which to my knowledge has never occurred.”

However, Underwood disagrees with Schwartz.

“The [customer] did at one point give them permission to use the credit card, but that card has limitations,” Underwood said. “Nobody has the power to alter your credit card except for you and your bank, and your bank can only do it with your authorization.”

The El Paso Police Department and office of the district attorney told KFOX14 they couldn’t provide a legal opinion on the matter, but the El Paso County Sheriff’s Office did.

“We would have to talk to the customers and read the contract, but it does sound strange what EP Fitness is doing,” said EPCSO spokesperson Chris Acosta. “We’ve never heard of anyone being able to directly change your credit card unless it’s through the bank itself. If EP Fitness is doing that, it sounds like it could be illegal and unethical. We would lean towards it being an offense.”

But it doesn’t end there.

In order for members to quit EP Fitness, the gym’s policy requires them to send in a certified cancellation letter to the gym with a 30-day notice.

Hector told KFOX14 that EP Fitness would still charge some people months after that certified letter was sent in.

Several websites list complaints about this.

One section of “pissedoffconsumer.com” has a portion dedicated entirely to EP Fitness where dozens of complaints have been posted about being overcharged, contract issues, fraud, shady policies and failure to cancel memberships.

KFOX14 spoke with two former EP Fitness members, Theresa Esparza and Ceci Patton, who said this happened to them despite sending in cancellation letters.

“The process it took to get out of the contract was four or five months,” Esparza said. “It was still being billed, we asked them to stop and they wouldn’t. I’ll be honest with you, I’ll never go back to them again.”

Patton made similar allegations.

“They continued to bill me for three months after, regardless that I had mailed in the cancellation as they required, they continued billing the credit card.”

Esparza and Patton said EP Fitness staff and management refused to explain why they were still being billed.

“I mean I was calling AJ, the admin that was answering the phones, three, four, five times a day, and he was getting really pissed off because I was getting to the point where I was being rude because I was being given the runaround with no definite answers of any kind,” Esparza said.

She showed KFOX14 the receipt for her notarized cancellation letter.

But EP Fitness president Durand responded to the allegations.

“What a lot of people don’t understand is you can’t just stop the train instantly,” he said. “We have to process all this paperwork and that’s why we ask that 30 days be allotted for the process of the paperwork, if it’s received and processed instantly a lot of times it doesn’t take 30 days, it takes four or five days.”

But Esparza and Patton both said that wasn’t the case for them, so when they had enough, they filed complaints with the Better Business Bureau.

BBB President Margaret Perez told KFOX14 that EP Fitness has been on their radar for the last 14 years.

“It’s one of the companies with the most complaints in El Paso, it’s definitely up there,” she said.

The BBB website currently lists 91 complaints about EP Fitness over the last three years, 53 of which involve billing issues.

EP Fitness has a “F” rating with the BBB. It’s not accredited with them either, and a BBB alert says the gym was falsely advertising that they actually were accredited.

“They in fact were not accredited,” Perez said. “They have a F rating, they aren’t even eligible for accreditation, so we had to send them a cease and desist letter on that, and we didn’t get it resolved.”

But Durand said EP Fitness has never advertised BBB accreditation, has never tried to get it, and he feels the gym’s “F” rating is some kind of retaliation for refusing to join the BBB.

“That’s a very unfair rating,” Durand said. “We did reach out to [the BBB], we asked what we have to do to change that. I was told that if we became members, they could show us how to fix that rating. I thought to myself, ‘God almighty that’s not cool, so you’re telling me I have to buy a rating? Never mind.’”

But Perez says that conversation never happened.

“That is completely, 100 percent untrue and I would love to go face to face with Mario Durand and have him say that to my face,” she said. “He has not been offered BBB accreditation because of his business practices and is not eligible to be accredited by BBB because of these practices. Our sales manager has been here for 11 years and he has not been offered accreditation during this time.”

Perez said most of the complaints the BBB gets about EP Fitness are about billing and cancellation issues.

“People are getting screwed over on fees they shouldn’t have to pay,” Hector said.

Underwood said there’s a blurry line between what EP Fitness customers are agreeing to in a signed contract, and what the gym is legally allowed to do with their credit cards.

“The road to hell is paved with good intentions,” he said. “They may have good intentions as far as dealing with their clients and their customers, but there are certain laws, especially ones about credit card abuse and debit card abuse, that as attorney who deals with this stuff every day really concerns me.”

But EP Fitness points out that Planet Fitness, one of their biggest competitors, also has a “F” rating and numerous complaints on the BBB website.

Durand told KFOX14 EP Fitness’ complaints have to be put into perspective.

“We have 100,000 customers, 100,000,” he said. If 83 of them were upset with me over the last three years, that means I have a 99.9 percent acceptance rating, which is phenomenal.”