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Prepaid Entertainment Contracts

Ohio’s Prepaid Entertainment Contracts Act (Ohio Revised Code (ORC) Section 1345.41 to ORC 1345.50) gives consumers three business days to cancel a prepaid entertainment contract, such as a gym membership.

What is a prepaid entertainment contract?

Under Ohio law, a prepaid entertainment contract is a contract where the buyer pays for or is obligated to pay for services prior to the buyer’s receipt of or enjoyment of the services. These services include dance studio lessons, social referral services (such as dating services), martial arts training, and health spa services (such as gym memberships).

How long do consumers have to cancel a prepaid entertainment contract?

Under the Prepaid Entertainment Contracts Act, suppliers must give consumers a three-day right to cancel. Specifically, consumers have until midnight of the third business day after which the first service is available to cancel the contract. Health clubs and other prepaid entertainment sellers are required to give consumers notice of their right to cancel. If a consumer chooses to cancel the contract, the cancellation must be in writing and the cancellation letter must be postmarked by midnight of the third day. In the event of a cancellation, the company must refund any money the consumer has paid, minus an expense fee up to $10.

What if the facility is not yet open?

If the facility has not yet opened for business when the consumer signs the contract, the consumer’s right to cancel extends to seven days after the first service under the contract is available. The facility or services must be available to the consumer no later than 180 days (6 months) after the contract is signed. The business cannot require the consumer to pay more than $50 or 10 percent of the total contract price (whichever amount is less) before the facility opens.

What happens if the facility relocates or the consumer moves?

If the facility relocates 25 miles or more from a consumer’s home, or if the consumer moves 25 miles or more away from the facility, the consumer has the right to a refund that is proportionate to the time remaining in the contract. The only exception is if a similar facility within 25 miles of the consumer’s home takes over the contract.

How long can a prepaid entertainment contract last?

The terms of a prepaid entertainment contract cannot exceed three years in length.

What contracts are not covered under the Prepaid Entertainment Contracts Act?

The Prepaid Entertainment Contracts Act does not apply to all contracts for “prepaid entertainment”. For example, contracts not covered by the law include: prepaid tanning salon sessions; prepayment for a band; prepaid plans at laser tag or paint ball facilities; and prepaid plans for ring tones or other cell phone services. They also do not include contracts for services provided by any public or private nonprofit school, college or university; by the state; or by any nonprofit religious, ethnic, or community organization. Nevertheless, sellers who provide these services must clearly and conspicuously notify consumers of their return policies and other important terms and conditions.