The gym chain's advertised prices were unobtainable, and transaction fees misled consumers
The Auckland District Court has fined CityFitness Group Ltd $1.12m after the company pleaded guilty to eight representative charges under the Fair Trading Act 1986 relating to misleading membership pricing and representations about a fee charged to gym members.
The charges arose from CityFitness' introduction of a three per cent fee on new memberships between 21 December 2023 and 30 April 2025. The Commerce Commission alleged that the company's advertised membership prices were unobtainable because all new members were required to pay the additional fee and that describing the charge as a "transaction fee" misrepresented its true nature.
CityFitness operates the country’s largest gym chain, with more than 225,000 members across over 58 locations. The company holds an estimated 40 per cent share of the national gym membership market and reported annual revenue exceeding $106m in 2024 and $120m in 2025.
According to an agreed summary of facts, CityFitness reviewed its membership pricing in 2023 and decided to introduce a 3% charge that applied across all membership tiers. Although labelled a transaction fee, the charge was not tied to the actual cost of processing payments. Instead, it was intended to help recover increased operating costs while preserving the company's advertised headline membership prices.
The Commerce Commission began investigating the practice in May 2024 after receiving complaints from customers. The investigation focused on whether the advertised weekly membership prices could actually be obtained and whether the transaction fee accurately reflected its purpose.
The District Court found that senior CityFitness executives deliberately implemented the fee following an extended review process. While the court accepted there was nothing improper about increasing membership prices to address rising operating costs, it concluded that CityFitness chose a mechanism that disguised the increase as a separate transaction-related charge.
The court found that the company's conduct relating to its advertised membership prices was highly careless and later became reckless. In relation to the transaction fee representations, the court found the conduct was deliberate, intentional and wilful. The court concluded that CityFitness understood the purpose of the fee and chose labels that did not accurately describe its function.
In assessing the seriousness of the offending, the court noted that approximately 187,850 new members joined during the charging period and that more than 125,000 customers paid the fee. The fee generated approximately $1.59m in revenue. The court also pointed to the extensive reach of CityFitness' advertising and its decision to continue using the fee structure for months after the Commerce Commission had commenced its investigation.
The court rejected submissions that consumers suffered no harm because the fee was disclosed before sign-up was completed. It found that consumers were initially attracted by headline prices that could never be obtained and that they ultimately paid more than the advertised membership price.
For sentencing purposes, the court adopted a starting point of $1.5m. It applied discounts totalling 35% for CityFitness' guilty plea, cooperation with the investigation and previous good character. The court then applied an uplift to reflect the company's financial capacity and the need for deterrence.
The resulting fine was $1.12m. Of that amount, $520,000 was allocated to charges related to unobtainable pricing representations, and $600,000 to charges related to transaction fee representations.
Commerce Commission Deputy Chair Anne Callinan said in a media release, “We will continue to uphold Kiwis’ rights and pursue businesses that mislead customers and try to gain an unfair advantage over their competitors by publicising prices that are not what they seem”.
