Current Status Bill Number:3852 Type of Legislation:General Bill GB Introducing Body:House Introduced Date:19950323 Primary Sponsor:Fair All Sponsors:Fair Drafted Document Number:BR1\18285AC.95 Residing Body:Senate Current Committee:Banking and Insurance Committee 02 SBI Date of Last Amendment:19950502 Subject:Physical fitness services contracts
Body Date Action Description Com Leg Involved
______ ________ _______________________________________ _______ ____________
Senate 19950504 Introduced, read first time, 02 SBI
referred to Committee
House 19950503 Read third time, sent to Senate
House 19950502 Amended, read second time
House 19950426 Committee report: Favorable with 26 HLCI
amendment
House 19950323 Introduced, read first time, 26 HLCI
referred to Committee
View additional legislative information at the LPITS web site.
Indicates Matter Stricken
Indicates New Matter
AMENDED
May 2, 1995
H. 3852
S. Printed 5/2/95--H.
Read the first time March 23, 1995.
TO AMEND SECTION 44-79-50, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE ENFORCEMENT OF PHYSICAL FITNESS SERVICES CONTRACTS, SO AS TO PROVIDE THEY ARE UNENFORCEABLE IF THE CONTRACT DOES NOT COMPLY WITH STATE OR FEDERAL LAW; TO AMEND SECTION 44-79-70, RELATING TO RIGHTS AGAINST SUCCESSORS TO CONTRACT, SO AS TO PROVIDE THAT NO PURCHASER OF A CONTRACT ASSOCIATED WITH PROVIDING PHYSICAL FITNESS SERVICES MAY COLLECT ON THE CONTRACT OR REPORT A DELINQUENCY UNDER THE CONTRACT IF THE CONTRACT IS IN VIOLATION OF THE CHAPTER; AND TO AMEND SECTION 44-79-80, RELATING TO FINANCIAL RESPONSIBILITY REQUIREMENTS, SO AS TO INCLUDE IN THE EXEMPTION FROM CERTAIN REQUIREMENTS, FACILITIES THAT HAVE BEEN IN CONTINUOUS OPERATION FOR TEN OR MORE YEARS.
Amend Title To Conform
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 44-79-50 of the 1976 Code is amended to read:
"Section 44-79-50. Any provision of any A contract for physical fitness services which does not comply with this chapter or any other applicable state or federal law is unenforceable against the member."
SECTION 2. Section 44-79-70 of the 1976 Code is amended to read:
"Section 44-79-70. Any right of action or defense which the member may raise based on the contract for physical fitness services is preserved against any assignee or successor to the contract. No purchaser of a note associated with or contained in a physical fitness services contract may make an attempt to collect on the note or to report the buyer as delinquent to a consumer reporting or consumer credit reporting agency if the physical fitness services contract contains a violation of this chapter."
SECTION 3. Section 44-79-80 of the 1976 Code is amended to read:
"Section 44-79-80. (1)(A) Every A center which enters into prepaid or credit contracts for physical fitness services of over three months' duration or over two hundred dollars in amount shall maintain with the administrator a surety bond in a sum to be determined by the administrator based on the estimated future costs to service contracts sold, but not to exceed fifty thousand dollars.
(2)(B) In lieu of the bond required in this section, the center may furnish under penalty of perjury information which reasonably demonstrates financial responsibility as will enable the center to satisfy the possible claims against the bond. In the event the center is controlled by, under common control with, or controls other corporations and the other corporation agrees in writing to satisfy the claims against a bond allowed under this section, the financial responsibility of the other corporation must be considered in determining the requirement for a bond. In determining whether the center has the requisite financial responsibility, the administrator may consider the operating and business history, reputation, and management within and without the State, as well as and the operating and business history and reputation of any a business controlled by, under common control with, or controlling the center. The provisions of subsections (1) and (2) of this section This subsection and subsection (A) do not apply to physical fitness service facilities that have been in operation for five years ten or more on the effective date of this Chapter consecutive years in this State under the same sole ownership or corporate ownership by the same principals at the time of renewal for its certificate of authority. Documentation acceptable to the administrator or the administrator's designee must be submitted to receive an exemption under this section from the financial responsibility requirements of subsections (A) and (B).
(C) A physical fitness center which has been provided with an exemption from the financial responsibility requirements under subsection (B) must have a written contract which contains the following statement in all capitals and boldface type, which is larger and bolder than any other type in the contract and in at least 14 point boldface:
STATE LAW REQUIRES THAT WE INFORM YOU THAT IF YOU (THE BUYER) CHOOSE TO PAY FOR ANY PART OF THIS AGREEMENT IN ADVANCE, BE AWARE THAT YOU ARE PAYING FOR FUTURE SERVICES AND MAY BE RISKING LOSS OF YOUR MONEY IN THE EVENT THIS HEALTH SPA CEASES TO CONDUCT BUSINESS. THIS HEALTH SPA IS NOT REQUIRED TO POST A BOND, AND THERE MAY BE NO OTHER PROTECTIONS PROVIDED TO YOU IF YOU CHOOSE TO PAY IN ADVANCE.'
This notice must be separately signed and dated by the consumer.
(3)(D) Each A center is required to notify the administrator upon substantial change of its financial status and to submit an annual report.
(4)(E) No person may offer physical fitness services in this State without first obtaining a certificate of authority from the administrator. A certificate of authority must be issued by the administrator upon submission of items (a)(1) through (f)(6) of this section. The applicant must submit:
(a)(1) A formal application for the certificate in such form and detail as the administrator requires.
(b)(2) A certified copy of its charter or articles of incorporation and its bylaws, if any.
(c)(3) If a corporation, a certified copy of the certificate of authority or good standing certificate from the Secretary of State of South Carolina.
(d)(4) A copy of its membership agreement.
(e)(5) A copy of any contract to be issued.
(f)(6) A list of outlets at which physical fitness services will be offered.
(g)(7) Any other relevant information required by the administrator.
(5)(F) No certificate of authority may be issued by the administrator until the center pays an initial certificate of authority fee of fifty dollars an outlet. Certificates of authority may be renewed upon payment of an annual renewal fee of fifty dollars an outlet on or before December thirty-first.
(6)(G) A copy of the certificate of authority required by this chapter must be posted conspicuously at every location where monies or contracts are received by the center.
(7)(H) It is unlawful for any a center or person acting on behalf of a center required to obtain and maintain a certificate of authority under this chapter to advertise, sell, or offer to sell the use of physical fitness services when a valid certificate is not on file with the administrator.
(8)(I) The administrator may order the center to cease and desist, or may revoke, suspend, or refuse to continue the certificate of authority of a center, whenever if, after a hearing and for causes shown, he the administrator determines that the center has violated or failed to comply with any provisions of this chapter or regulations promulgated under the authority of this chapter, or if, after notice and opportunity for a hearing, it is shown that:
(a)(1) any a document or declaration required by subsection (4)(E), items (a)(1) through (g)(7) were false or misleading; or
(b)(2) by clear and convincing evidence the center or its agents, officers, or employees have engaged in false, fraudulent, or deceptive conduct in its dealings with customers;
(9)(J) In lieu of revocation, suspension, or refusal to continue a certificate of authority of a center, the administrator in his discretion may assess an administrative penalty for a violation of subsection (4) (E) or (8) of this section (I) not to exceed five hundred dollars for each violation, not to exceed five thousand dollars for matters commenced in any a calendar year. These penalties may be assessed in connection with orders to cease and desist."
SECTION 4. This act takes effect upon approval by the Governor.