No. 29238 (Amendment): R152-23. Utah Health Spa Services

DAR File No.: 29238
Filed: 11/17/2006, 08:28
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule is amended to reflect changes the Division believes are necessary to enforce the Health Spa Services Protection Act, Title 13, Chapter 23.

Summary of the rule or change:

The proposed amendment to Subsection R152-23-4(E) provides the required language in the contract regarding the right to rescission set out in Subsection 13-23-3(6). The proposed amendment to Subsection R152-23-4(F) states that a consumer may not be charged for exercising the right to rescission set out in Subsection 13-23-3(6). The proposed amendment to Subsection R152-23-4(J) establishes the requirements for the notice required by Subsection 13-23-5(7).

State statutory or constitutional authorization for this rule:

Sections 63-46a-3, 13-2-5, and 13-23-1 et seq.

Anticipated cost or savings to:

the state budget:

There are no anticipated costs or savings to the state budget. These amendments have no impact on the cost to administer the rule.

local governments:

The proposed amendments do not apply to local governments; therefore, no costs or savings are anticipated.

other persons:

Health spa owners will incur minimal printing costs associated with bringing their contracts into compliance with the proposed rule.

Compliance costs for affected persons:

Health spa owners will incur minimal printing costs associated with bringing their contracts into compliance with the proposed rule.

Comments by the department head on the fiscal impact the rule may have on businesses:

No fiscal impact to businesses is anticipated as a result of this rule filing beyond those indicated in the rule summary. Francine A. Giani, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Commerce
Consumer Protection
HEBER M WELLS BLDG
160 E 300 S
SALT LAKE CITY UT 84111-2316

Direct questions regarding this rule to:

Thomas Copeland at the above address, by phone at 801-530-6601, by FAX at 801-530-6001, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

01/15/2007

This rule may become effective on:

01/22/2007

Authorized by:

Kevin V Olsen, Director

RULE TEXT

R152. Commerce, Consumer Protection.

R152-23. Utah Health Spa Services.

R152-23-4. Registration Requirements and Contracts for Health Spa Services.

A. Prior to selling or attempting to sell a Membership Contract, a health spa facility must file the following documentation with the Division:

1. A completed application on the form prescribed and furnished by the Division which shall include:

a. Name, addresses, and telephone numbers of owner(s) of the Health Spa Facility and the facility address, telephone number, and name of contact person at the facility.

b. A check or money order for a $100 non-refundable application fee.

c. A current pricing structure for membership services.

d. A copy of the contract(s) utilized by the facility containing the language required by the Act.

e. The original or certified copy of the surety bond, letter of credit, or certificate of deposit in the required amount or, if applicable, the information set out in the application as the basis for a claim of exemption from registration.

f. The number of membership contracts that relate to each facility.

2. Notice of intent to sell memberships.

B. Each Membership Contract shall contain a provision, printed in all capital letters which reads substantially as follows: "IN THE EVENT THE HEALTH SPA FACILITY CLOSES AND ANOTHER HEALTH SPA FACILITY OPERATED BY THE SELLER, OR ASSIGNS OF THE SELLER, OF THIS CONTRACT IS NOT AVAILABLE WITHIN [A ]FIVE (5) MILES [RADIUS ]OF THE LOCATION THE MEMBER INTENDS TO PATRONIZE, SELLER WILL REFUND TO MEMBER A PRORATA SHARE OF THE MEMBERSHIP COST, BASED UPON THE UNUSED MEMBERSHIP TIME REMAINING ACCORDING TO THE CONTRACT."

C. All Membership Contracts shall specify what items of equipment or services provided by the health spa facility on the date of the execution of the membership contract are subject to deletion or change at the discretion of the facility.

D. All Membership Contracts sold prior to opening of the health spa facility shall allow the buyer a three (3) day right of rescission in accordance with Section 13-23-4 of the Act, or Section 13-11-4(m) of the Utah Consumer Sales Practices Act.

E. The right of rescission set out in Section 13-23-3(6) shall:

1. be a conspicuous statement written in dark bold with at least 12 point type on the first page of the contract; and

2. read as follows: "YOU, THE CONSUMER, MAY CANCEL THIS CONTRACT AT ANY TIME PRIOR TO MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE DATE ON WHICH THE CONTRACT IS EXECUTED."

F. No fee may be charged if a consumer exercises the consumer's right to rescind the contract pursuant to Section 13-23-3(6).

[E.]G. The dollar value of a Membership Contract shall be clearly stated on the face of the contract.

[F.]H. In any event, no Membership Contract shall be sold which provides a membership term of longer than thirty-six (36) months.

[G.]I. The purchaser of a Health Spa Facility shall replace the Seller as a party to any unexpired Membership Contract and shall honor all Membership Contracts of the purchased facility in effect at the time of purchase, pursuant to Section 13-23-5(2) of the Act. In the event a Health Spa Facility shall be sold under circumstances which will result in its closure and the purchaser shall not operate a Health Spa Facility within 5 miles thereof, purchaser must notify Members of such closure in writing within 10 days of the date of sale. Members may cancel their outstanding Membership Contracts or may choose to continue their Membership Contract in force. Notice of such election shall be in writing mailed to the purchaser within 30 days of the receipt of notice of closure of the acquired Health Spa Facility.

J. The notice required in Section 13-23-5(7) shall be in writing and shall include the following:

1. The date on which the health spa will cease operations or relocate and fail to offer an alternative location within five miles;

2. Information concerning the members of the health spa, including:

a. the total number of members;

b. the name and address of each member;

c. the total cost of each membership; and

d. the effective dates of each membership;

3. Proof of the bond, letter of credit, or certificate of deposit required under Section 13-23-5(2)(a) and proof that the bond, letter of credit, or certificate of deposit will remain in force for one year after the health spa notifies the division that it has ceased all activities regulated by Title 13, Chapter 23 of the Utah code;

4. A description of what action the health spa plans to take with regard to its members, including:

a. the amount of each member's refund;

b. any reason refunds are not to be made;

c. an explanation of how refunds are to be calculated; and

d. copies of the refund checks that the health spa has issued; and

5. Any complaints that the health spa has received from the members and how the complaints were resolved.

[H.]K. A separate registration shall be required for each separate location maintained by a health spa business.

 

R152-23-5. Rescission.

A. In the event a Health Spa Facility shall, for any reason, close, discontinue normal operations or otherwise cease to do business while having outstanding obligations to provide membership services to members holding valid membership contracts, the Health Spa Facility must offer, in writing, to rescind all such membership contracts and to refund the unused portion of all Member's membership fees. Such written offer of rescission shall establish the procedure and time limit for acceptance of the rescission offer and obtaining the desired refund.

B. An offer of rescission shall be made to each purchaser whose Membership Contract is valid on the last day the Health Spa Facility is open for business. The Health Spa Facility shall provide the Division with a list of Membership Contracts valid on the date of closure [within ]10 business days before[of] such closure.

C. Money to be refunded to members upon closure of a Health Spa Facility under these Rules shall be placed in escrow with a bank or other financial institution previously approved by the Division. Such funds shall come from a Bond, Letter of Credit, or Certificate of Deposit payable to the Division.

D. Refunds shall be made to Members who submit claims within a time period to be prescribed by the Division. Such refunds shall be made under the supervision of the Division and shall, if insufficient funds are available for full refund, be made on a prorata basis based upon the full amount due a claimant. The amount due shall be determined by multiplying the number of months remaining on claimant's membership term as of the date of closure by the monthly cost of such membership to the member at the time of purchase. Periods of less than a full month shall be compensated by determining a daily cost of membership and multiplying such daily cost by the number of unused membership days in such period.

E. Refunds shall be made to claimants within 90 days following the final date for submission of claims in accordance with the procedures specified above.

F. The Division may recover from the funds deposited in escrow pursuant to this Rule, its costs, including investigative costs, processing costs, attorneys fees and other expenses related to administration of rescissions made under these rules.

G. In the event there shall be funds remaining after full refund to all claimants and payment of costs of the Division, such excess shall be returned to Owners of the Health Spa Facility.

 

KEY: consumer protection, health spas

Date of Enactment or Last Substantive Amendment: [October 18, 2005]2007

Notice of Continuation: October 30, 2002

Authorizing, and Implemented or Interpreted Law: 63-46a-3; 13-2-5; 13-23-1