A falsehood was created to do this.
In New Zealand, the country's largest gym chain has been brought before the courts for a practice as old as commerce itself: advertising one price while collecting another. CityFitness, serving some 125,000 members, concealed a compulsory surcharge behind the neutral language of a 'transaction fee,' generating $1.6 million in undisclosed revenue before the Commerce Commission intervened. The Auckland District Court's $1.12 million penalty is not merely a financial reckoning — it is a public affirmation that transparency is not a courtesy businesses may extend at their discretion, but an obligation the law will enforce.
- 125,000 gym members were quietly paying more than they agreed to — a 3% charge hidden behind innocuous language and never disclosed at the point of sign-up.
- The Commerce Commission found the fee had nothing to do with covering transaction costs and everything to do with padding profits, generating $1.6 million in revenue customers never knowingly authorised.
- Judge David Clark identified the deception as a deliberate corporate decision made at the highest levels, not an administrative oversight or a grey area of compliance.
- CityFitness admitted to eight charges under the Fair Trading Act, and the $1.12 million fine now stands as both punishment and precedent for the fitness industry.
- The ruling sends a clear signal: in New Zealand, the advertised price must be the real price — and regulators are watching.
CityFitness, New Zealand's largest gym chain, has been ordered to pay $1.12 million after admitting it misled customers about the true cost of membership. The company advertised weekly memberships from $6.99, but quietly added a compulsory 3 percent charge it called a transaction fee — a label the Commerce Commission found to be misleading in both name and intent.
The hidden fee was not optional, not incidental, and not what its name implied. Across roughly 125,000 members, it generated $1.6 million in revenue that customers had not knowingly agreed to pay. Commerce Commission Deputy Chair Anne Callinan was unequivocal: the charge was a profit mechanism dressed in neutral language, and the instruction to businesses could not be simpler — be honest with your customers.
Auckland District Court Judge David Clark noted that the decision to mislead had been made at the highest levels of the organisation. While businesses have legitimate grounds to protect themselves against rising costs, the judge observed, those protections must be pursued honestly and within the bounds of the Fair Trading Act. CityFitness had chosen otherwise, and admitted to eight charges under the Act.
The fine is both a financial penalty and a public statement about corporate accountability. For consumers, the case is a reminder that the advertised price is not always the price paid — and that regulators are prepared to act when the gap between the two is deliberate.
CityFitness, the country's largest gym chain, has been ordered to pay $1.12 million after admitting it systematically misled customers about the true cost of membership. The Commerce Commission found that the company advertised weekly memberships starting at $6.99—a figure that became the public face of its pricing—while concealing a compulsory 3 percent charge it labeled a transaction fee. That hidden cost was neither optional nor incidental. It was mandatory, baked into every payment, and designed to inflate the company's margins.
The scheme worked on a staggering scale. Approximately 125,000 people paid the undisclosed fee over the period in question, generating an additional $1.6 million in revenue that customers believed they were not agreeing to when they signed up. The advertised price and the actual price were two different things, and CityFitness knew the difference.
Deputy chair Anne Callinan of the Commerce Commission was direct about what had occurred. The transaction fee was not, in fact, a transaction fee at all. It was a profit mechanism dressed up in neutral language. The message to business, she said, was unambiguous: be honest with your customers. There is no gray area in that instruction.
Auckland District Court Judge David Clark went further, noting that the decision to mislead had been made at the highest levels of the company. CityFitness had consciously disregarded the rights and interests of potential members in favor of protecting its own commercial position. A falsehood had been constructed deliberately to achieve that end. The judge acknowledged that businesses have legitimate reasons to protect themselves against rising costs, but those protections must be pursued honestly, in ways consistent with market norms and the Fair Trading Act. CityFitness had chosen a different path.
The company admitted to eight charges under the Fair Trading Act. The fine represents both a financial penalty and a public statement about what happens when a major corporation decides that transparency is optional. For anyone considering a gym membership in New Zealand, the case serves as a reminder to read the fine print—and to expect that the advertised price may not be the price you actually pay. For CityFitness, it is a costly lesson in the cost of cutting corners.
Notable Quotes
Be honest with your customers.— Anne Callinan, Deputy Chair of the Commerce Commission
CityFitness disregarded the rights and interests of potential members in preference to looking after its own commercial interests. A falsehood was created to do this.— Judge David Clark, Auckland District Court
The Hearth Conversation Another angle on the story
Why would a company this large risk its reputation over a 3 percent fee? It seems like a small margin to gamble with.
It doesn't seem small when you multiply it across 125,000 members. That's $1.6 million in additional revenue. For a large company, that's material. The real gamble was that they thought they could get away with it—that customers wouldn't read the terms carefully enough, or that regulators wouldn't notice.
But the Commerce Commission did notice. What changed? Why are they cracking down now?
Consumer protection enforcement has been tightening. The Commission has been more aggressive about what counts as misleading advertising. The line between a disclosed fee and a hidden fee is now being drawn more sharply. CityFitness crossed it.
The judge said the decision came from the top. Does that mean executives knew exactly what they were doing?
That's what the court found. This wasn't a rogue manager or a software glitch. Someone at the leadership level decided that calling a profit mechanism a transaction fee was acceptable. That's what made it serious enough for the judge to comment on it specifically.
What happens to the customers who paid the fee? Do they get their money back?
The source doesn't specify refunds, but the fine itself is substantial—$1.12 million. Whether that translates to compensation for members is a separate question the Commission may still address.
Will other gyms change their practices because of this?
They should. This is a clear signal that the Fair Trading Act is being enforced, and that calling something a transaction fee when it's really a profit mechanism won't hold up in court.