First Carbon Tax Casualty: Melbourne Gym Fined, Pays for Misleading Claims

In what is considered to be the first casualty of the carbon tax commotion, a Melbourne gym has been fined, and paid dearly, for its misleading claims on the supposed impact of the tax to the cost of its memberships.

The Australian Competition and Consumer Commission fined Genesis Fitness Club Berwick after it offered new contracts that stipulated a "rate freeze" to assist members elude price increases of between 9 per cent to 15 per cent due to the implementation of the carbon tax. Flaunting itself as "one of Australia's premier fitness organisations," the fitness club in Melbourne's south-east paid a whopping infringement notice of $6600 because of the false claims.

Genesis Fitness Club Berwick sent its more than 2,100 members the notices of their contract extensions in April this year.

More than 200 people extended their gym contracts based on the new offer.

"We are concerned that the false claims about the carbon price may have encouraged these people to sign lengthy contract extensions they otherwise would not have," Rod Sims, ACCC chairman, said.

"Businesses are free to set their prices as they see fit but must carefully consider the basis for making carbon price claims and ensure such claims are truthful and have a reasonable basis."

Moreover, as part of the infringement matter, the CEO of the Genesis Division of Belgravia Health & Leisure Group Pty Ltd, which manages the GFC franchise network, wrote to all affected members offering them the opportunity to withdraw from the contract extensions at no extra cost.

"This is a good outcome for consumers that may have been misled by the claim," Mr Sims said.

In June, the parent company of the Brumby's Bakery franchise made an apology for encouraging its bakeries to increase prices based on supposed effects of the carbon tax.

Before its implementation on July 1, the Australian government had issued warning to businesses not to apply misleading claims and use the carbon tax as an excuse. Should they be found liable by the ACCC, the latter will issue warning letters, infringement notices of $6600, or take court action with fines up to $1.1 million.