Gym closures: Buyers beware

Another one bites the dust. Hundreds, perhaps thousands, are crying foul. When will this end? Perhaps never.

For every consumer who has lost money, there must be many others who have benefited in some ways.

For every such company that winds up because of financial problems, hundreds are still running and their consumers enjoying their packages ("California Fitness gym closures: Get firms to insure packages over $500" by Mr Christopher Low Kin Siong and "Tighten rules against firms collecting advance payments" by Mr Chua Boon Hou; both published yesterday, and "Bar all package deals" by Dr Michael Loh Toon Seng; Forum Online, yesterday).

As with any investment, reward is proportional to risk. Those involved are not vulnerable young children or illiterate people.

Most of the people who signed for the packages are able-bodied thinking adults. Many are well-educated professionals who know how a business functions.

There are frequent newspaper reports about businesses closing down after collecting vast amounts of cash. These include private schools, beauty shops, repair shops, spas and even high-dividend investment companies.

As long as people believe they are getting a better deal by paying in advance, such a business model will continue to exist.

Parting with a large sum of money is not unlike gambling. Always expect and be prepared for the worst.

Daniel Chan Wai Piew

A version of this article appeared in the print edition of The Straits Times on July 22, 2016, with the headline 'Gym closures: Buyers beware'. Print Edition | Subscribe