Planet Fitness (NYSE: PLNT) tumbled on Thursday after The Bear Cave, a research newsletter, published a report on the gym chain, alleging that the business had exploited customers and that while investors believe Planet Fitness has room to grow, “The Bear Cave doesn’t.”
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In its report, TBC claims that hundreds of customer complaints about overbilling, fraudulent transactions, high fees, and non-cancelable memberships have been discovered through several Freedom of Information Act requests.
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According to TBC, there is a pattern of misconduct from Planet Fitness. The misconduct allegedly includes aspects such as the company ignoring in-person cancellation attempts, disregarding several client cancellation letters, resuming billing after cancellations, charging fictitious fees, and forbidding consumers from cancelling because they owe a back payment.
In addition, TBC alleges Planet Fitness created a fake investor presentation slide to “obscure franchisee saturation.”
TBC declares that “after reviewing the evidence,” it is left “wondering whether Planet Fitness is actually a thriving gym franchise or an illegal billing operation with gyms on the side.”
They go on to outline various issues and scenarios customers trying to cancel memberships have come across, which includes an October 2020 complaint to the North Dakota Attorney General submitted by a Planet Fitness customer. “These are no isolated incidents,” TBC states.
“Planet Fitness often boasts these measures ensure a “judgement free environment” for beginners. A skeptic may wonder if these measures are simply designed to discourage frequent gymgoers from joining Planet Fitness,” they add.
Planet Fitness shares closed Wednesday’s session at $80.47, down 2.98%.
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