Facing a lawsuit, health club chain Peak Fitness agreed to stop selling prepaid gym memberships and collecting fees other than monthly payments until the company can secure bonds for each health club, announced Attorney General Roy Cooper.

"Consumers shouldn't be left out in the cold when their health club closes," Cooper said. "These clubs must follow the law before they take upfront money from new members."

Cooper filed suit against Peak Fitness on Wednesday, resulting in a consent judgment which Wake County Superior Court Judge Paul Ridgeway signed Thursday afternoon. Under the consent judgment, Peak Fitness and its owner Jeffrey R. Stec are barred from selling prepaid gym memberships until the company gets adequate bonds for each health club. Peak Fitness can continue to operate but can only collect money from customers who pay month to month for their membership.

Cooper's office was notified in March that Peak Fitness' bonding company was cancelling all of Peak Fitness' bonds as of May 12. Peak Fitness has not been able to secure replacement bonds. These bonds are required by state law to reimburse consumers if the health club closes and the company doesn't have money to refund consumers who paid in advance. In addition, Peak Fitness is required to submit sworn statements of liability to the Attorney General's office twice a year. These statements are used to determine the amount of bond necessary. In March, Peak Fitness did not submit sworn statements for all health clubs and understated its liability by approximately $2 million in the statements that were submitted.

Earlier this year, Cooper entered into a consent judgment with Peak Fitness that made substantial changes to customer service, contracts and billings at all 28 of its health clubs across North Carolina. Peak Fitness agreed to designate a single point of contact to handle consumer complaints, clearly post contact information for Peak's billing company, give advance notice to gym members and the Attorney General's office when a health club closes or transfers memberships, and purchase and maintain appropriate bonds for each health club.

Since January's consent judgment, Peak Fitness has abruptly closed gyms in Charlotte, Garner, Knightdale, Raleigh and Winston-Salem. Also, Peak Holdings, a subsidiary of Peak Fitness, filed for Chapter 11 bankruptcy in April.

Peak Fitness has owned or operated health clubs in Apex, Asheville, Cary, Chapel Hill, Charlotte, Clayton, Clemmons, Concord, Cornelius, Durham, Fuquay-Varina, Harrisburg, Garner, Knightdale, Raleigh, Statesville, Wilmington, and Winston-Salem.

In the past five years, Cooper's office has received more than 500 complaints regarding Peak-related health clubs.

"Over the past few years, we've been able to recover more than one million dollars for hundreds of North Carolinians who were members of health clubs, gyms or dating clubs that shut their doors," Cooper said. "If your health club closes down unexpectedly, I want to know about it."

Cooper encourages consumers to check out a health club thoroughly before signing any contract. Be sure to read contracts carefully to avoid automatic renewals and early termination fees. Also, remember that you have three days to cancel your contract. If you have problems with your health club or want to check up on one before joining, contact the Attorney General's Consumer Protection Division at www.ncdoj.gov or toll-free at 1-877-5-NOSCAM.