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Gym customer Barbara Raphael, right, was outraged that Kitsilano Workout continued debiting her bank account, even after she twice cancelled her membership. ((CBC))

A Vancouver workout facility is being criticized for taking monthly fees out of a customer's credit union account long after her gym membership was supposed to end.

Barbara Raphael said she has not attended Kitsilano Workout since 2003, but she has been unable to stop the gym from debiting her account, despite attempting to cancel her membership twice.

"I think it's insidious," said Raphael. "The only thing you can do is change your bank account. I think they are taking advantage of people."

Raphael said her experience highlights the potential perils of signing pre-authorized debits to allow a business to take money from a banking account.

"You're basically giving them access to your account," she said.

Raphael signed a two-year initial contract with Kitsilano Workout in April 2003, with an option to cancel after two years. She said she only used the facility half a dozen times that year.  In 2004, she said she gave notice to the gym that she wanted her membership cancelled. She said the gym told her to put her request in writing and she did. Her two-year obligation to pay ended in June 2005.  Records show the business has continued to take payments from her account ever since.

"They kept doing it and I thought that is absolutely not OK," said Raphael. "I think what they are doing is playing the odds that people are not going to blow the whistle on them."

BBB gives gym 'unsatisfactory' rating

Kitsilano Workout has an unsatisfactory rating with the Better Business Bureau in mainland B.C.

"They have a reputation of not solving customers' problems," said BBB spokesperson Lynda Pasacreta.

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Kitsilano Workout owner Leslie Arnold says she is hoping to reach a reasonable resolution with Barbara Raphael, following CBC News inquiries. ((CBC))

Kitsilano Workout owner Leslie Arnold told CBC News the gym no longer sells the two-year locked-in memberships, because customers complained about them. Arnold also said the business had a lot of problems in 2004, after the majority shareholder passed away.

"We had a six-month period where all hell broke loose," said Arnold. "Accounts were frozen and the cancellation requests all got backlogged."

She said the gym has no record of Raphael's cancellation notice from that time. Their electronic records show Raphael's account to technically be in arrears because of the stop payments.

"With that said, we are not unreasonable and are willing to work with her to obtain a reasonable resolution," said Arnold.

The outstanding issue, though, for Raphael — is that her financial institution continued to give the gym her money.

"They should stop it altogether," said Raphael, who does her banking at Vancity credit union. "They should have stopped it altogether when I explained the situation but they didn't."

Since 2004, Raphael said she has put four separate stop payments on Kitsilano Workout debits from her account.  Rules limit stop payments to six-month periods, though, so each time the debits started up again she had to put in another request to stop payment.

She sent the gym a letter in December 2007, then went back in person again to cancel in writing, as the membership contract requires. Even so, the debits — $27.25 per month — continued.

Stop payments didn't work

What bothers Raphael most is that her stop payments didn't work — on two occasions — after the amount of the monthly debit request was changed by Kitsilano Workout to reflect changes in the GST. The latest change came earlier this year. The monthly charge switched from $27.51 per month to $27.25, effectively overriding Raphael's stop payment and allowing new debits to go through.

"They changed the amount this last January again, and my banker said that is what they can do," said Raphael.

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Better Business Bureau spokesperson Lynda Pasacreta says she hears lots of complaints about gym contracts and pre-authorized bank debits. ((CBC))

Vancity credit union spokesperson Jane MacCarthy confirmed if a creditor with a pre-authorization submits a debit for a different amount that effectively bypasses the stop payment.

"The new amount put in by the originator [the gym] makes it a different pre-authorized electronic transaction that would not be stopped by the stop payment request," MacCarthy wrote in an e-mail.

"If a member cannot resolve the situation with the originator, we advise that the simplest course of action is to change their account, thus terminating the pre-authorized payment on that account."

Maura Drew-Lytle of the Canadian Banker's Association said it is standard for financial institutions not to check pre-authorized debits when they are processed.

"The customer's financial institution does not have a copy of the signed PAD (pre-authorized debit), so they do not know what the terms of the payments are. Copies of the PAD are held by the biller and customer only," Drew-Lytle wrote in an e-mail. "A biller is supposed to notify the customer if they are changing the amount specified."

Raphael said she didn't receive notice of any change from Kitsilano Workout. She estimated the gym has now taken approximately $600 from her account, over and above what the initial two-year membership was worth.

'Buyer beware' of gym contracts: BBB

"We get a lot of calls on this industry," said Pasacreta of the Better Business Bureau. "There are refund issues. There are contract issues."

Pasacreta said the BBB has received 194 formal complaints against B.C. mainland gyms in the last three years, in addition to many more calls from people who didn't file a complaint. 

She said many people don't understand that, after the initial contract period, often two years, the memberships automatically continue — unless the customer gives the gym written notice, as Raphael did.

"I don't think the general public is aware of automatic renewal contracts and they sign on the dotted line," said Pasacreta. "It's a good gig because they have people locked in. But, that is where it is buyer beware. Know what you are getting into."

The BBB advises people who are upset with gym debits not to stop payment, though, because the gym can then send the account — and the person's banking information — to a collection agency.

"Let's say they've decided they don't like that fitness studio and they are going to stop payment. We say don't do that because you can end up in a whole other mucky situation where it ends up against your credit rating," said Pasacreta.

As a result of CBC News inquiries, Leslie Arnold of Kitsilano Workout said Barbara Raphael's membership and the debits to her account have now been cancelled.

Arnold also said, if Raphael is owed any money, "We would be more than happy to cut her a cheque."

In response to the Better Business Bureau assessment, Arnold called it the "Busybody Bureau." She said she believes the bureau gives unsatisfactory ratings, unfairly, to businesses like hers that don't have BBB memberships, as part of a marketing strategy to get them to sign up.

"I love my company and we are reasonable people," Arnold said. "If we make mistakes, we fix them."