5 Lies Fitness Industry Collection Companies Tell to Rip You Off

The next time you sign up for a gym or fitness center membership, make sure you read the fine print.

Your gym or fitness center will be using a club management software application to automate your fitness club check-ins, personal training session billing, group fitness class scheduling and locker rentals among many others. The most overlooked component of these club management software is … wait for it:

COLLECTING YOUR MONTHLY DUES!

Collecting monthly dues isn’t rocket science or brain surgery. It’s easy. In fact, there are thousands of start-ups and established businesses that are in the monthly billing business; companies like Spotify, Pandora, Netflix, Verizon, AT&T and many of the best brands in the fitness business.

Don’t get roped into paying fees for submitted transactions only pay for collected ones. While transaction fees of .05 -.25 cents are applicable a declined credit card has NO OTHER FEES!

Its not uncommon to see collection and account receivable (AR) companies disguised as software companies. They want to “simplify” your billing so that you can plan your weddings, go rock climbing or anything else to keep you from focusing on what these firms are going to do to your business.

Why do these types of collections and AR companies want you to be otherwise occupied? So they can rip-off your members when you aren’t looking.

Just run a Google search.

If you think you are using one of these companies, Google their name to see what consumers are saying about them and the volume of complaints that have been filed against these vendors. You’ll quickly understand the damage these companies may already be doing to your business reputation, your member experience and our industry.

I recently had the pleasure of joining our team on a payments and collections assessment with a fitness company that had been with the same vendor for many years. The results were ugly with practices that were costing this business big money from rebilling fees from certain declines on closed accounts to charging higher fees for in-club swipe transactions on past due bills, and outrageous PCI fees, statement fees and electronic delivery fees.

In an effort to educate the industry and to put a stop to unethical and abusive business practices, I’ve developed a list of TOP FIVE PAYMENTS LIES payment collection companies make in the fitness industry that you need be aware of.

  1. Don’t get roped into paying fees for submitted transactions only pay for collected ones. While transaction fees of .05 -.25 cents are applicable a declined credit card has NO OTHER FEES!
  2. There is no such thing as a credit card decline fee. With a Bank Draft or ACH a processor may charge a fee of anywhere from $1.50 to $5.00 but credit cards do not have decline fees.
  3. Bank Draft/ACH transactions DO NOT HAVE a “BASE RATE” associated with them. A bank draft should cost you no more than .25 cents per transaction.
  4. The card account updater that updates your expiring cards does NOT cost a $1.00 per update. Anyone charging you that kind of fee is making over 1000% margin!!
  5. Your members should not be asked to pay “decline” and “service fees” on transactions. Imagine if NETFLIX did this to you because your card expires! It creates a lousy consumer experience and lots of consumer complaints.

 

Here’s are two more BONUS tips because I see so many people make these mistakes:

 

  1. Have an attorney read your contracts so that you have a clear understanding of what your business is getting into.
  2. Never wait 15-days or more to get your money. Once your billing is processed you should demand that your money is wired or ACH’d to your business within a day or two.

 

Finally, here’s a special offer for fitness companies that need help in assessing their vendor payment collection and or club software agreements:

 

Get a FREE one-hour Payment Processing and Collections Contract Analysis and learn how to address abuses in your payments and club software agreements.

At the end of the day, it comes down to one question that you need to answer: Does my payment collections vendor do better when my company isn’t? Is that really a partnership?

 

Al Noshirvani is the Co-founder and CEO of Motionsoft

2 Comments

  1. Reformed Gym Rat says:

    We have see how these practices by the collection companies can hurt us and plan on using a service like what you guys offer as soon as our contract with our current vendor expires

  2. Give me a call, I’d love to hear what you have to say….

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The Circuit Blog provides insights and analysis on technology in the health, wellness, and fitness industries.

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