Can you get out of gym memberships and phone plans contracts?

For this week’s Reality Cheque column, we’re looking at how hard it is to get out of subscription contracts (think streaming, gym memberships and more) and how to stop those auto payments from draining your account. 

If you’re reading this article and are trying to get out of a continuous service contract, say for a gym membership or anything that requires recurring payments, know that I know you’ve done everything you can. And for many of us non-lawyers (including me), these continuing service contracts can put us in a squeeze. But the price to cancel can seem too high—or the contract look impenetrable. 

While not easy, getting out of these kinds of contracts can be done. Take Brian for example, an Alberta resident and student-at-law who chatted with me—anonymously to avoid possible professional risk. He signed up for an annual gym membership to get a break on membership fees, but then he started hearing rumours the gym would be closing. 

“When I went to cancel my membership, they told me that there was a cancellation fee—a breakage fee—in the amount of $50 for every three months left on the contract,” he says. “This was not in the contract, but they basically were holding my credit card hostage.” As per his contract, he knew of the $60 termination fee, but with this provision—apparently written in invisible ink—he’d be out of pocket $160 or more. 

Can you relate? How do you get out of a bind like that?

Start with a conversation

Jessyca Greenwood, the principal lawyer and founder of Greenwood Law in Toronto, doesn’t mince words about contract termination provisions. “If they’re clear, generally you have to follow them. Otherwise it can be quite difficult,” she says. “But sometimes contracts are unclear.” Each contract is unique.

That said, common continuing service contracts, like gym membership, generally require a cancellation fee payment. The fee may not be applicable if, as in Brian’s case, the service the company is providing isn’t as they promised in writing. 

If the terms aren’t met, then you have to roll up your sleeves. “ You have to try to negotiate your way out of it,” Greenwood says. While that might sound daunting, she has some simple advice. “ Put your complaints and your issues in writing. If you’re saying that the other side has not kept up their end of the bargain, therefore the contract should no longer be in place and you shouldn’t have to pay, you want to make sure that you create a paper trail that supports your position.” And, she adds, consumers should remember that businesses generally want to keep their customers happy and paying. This is an important point of leverage—though, since the gym was closing, it wasn’t helpful for Brian.

Be careful fighting with plastic

If negotiations aren’t going anywhere, it might be tempting to try cancelling your credit card so you can’t be charged or try disputing the charges with your card issuer. Brian tells me he thought of this, until he did some digging. 

“I called my bank, and they told me I needed to bring the bank a copy of the cancellation agreement so they could put it on file. If any charges from the gym to that credit card were paid, they would classify it as a fraudulent payment,” he says. Without that termination agreement in his file, Brian was worried cancelling his card with pending charges could hurt his credit score. 

Working with a credit card company to reverse potentially unauthorized charges is a next step, says Greenwood, after you’ve tried to cancel the contract and exit it properly. A ripe time to contact your credit card company is when the service provider is ignoring you after you’ve presented evidence to them that warrants termination of your contract, she adds. 

She recommends unhappy customers to clearly document the steps they’ve taken to communicate with the service provider and the evidence regarding the potential breach of contract. “Then it’s more likely that the credit card company will support you,” she says. “Otherwise they may say you’re out of luck because you're contractually obligated to that provider.” 

How to escalate the situation

Say you’ve taken all the right steps to resolve the issue amicably but still can’t get anywhere. What’s next? 

It gets tricky, says Greenwood, but you do have options. Consulting a paralegal or lawyer to get some advice. Paralegals can only give limited independent legal help, and only in certain provinces, such as Ontario. (Check your province’s law society website. It likley indicates what a paralegal can and cannot do.)

Another route is to send a demand letter “that sets out your position—you want to terminate the contract—and proposes a way to resolve the matter,” Greenwood says, adding that you can hire a legal professional or tap AI to draft one for you.

Brian ran into a wall when he tried to back out of his contract. “I let it kind of fester,” he admits. After hearing the company was facing more financial hardship, he went to the gym to discuss the matter in person—and he didn’t pull any verbal punches.

“ They folded a bit. They let me sign the termination agreement, and they didn’t charge me the cancellation fee.”

Where to find outside help

Depending on your situation, it may not be worth it to hire a legal professional just to cancel, say, a gym membership. Canadians have access to a number of consumer protection groups, says Greenwood. For example, the non-profit Pro Bono Ontario is a resource for free consultation for Ontarians. Eligible residents of British Columbia can access pro bono legal services through Access Pro Bono, or through Legal Aid BC.

“ Each province has its own consumer protection legislation. Look at the relevant government website in your province to see if there are any programs set up to help you with the particular dispute that you’re having, and if there are any other groups or resources that can help you,” Greenwood says.

Brian does have an edge on most Canadians trying to cancel a contract, given he passed the LSAT and graduated law school. But the way he handled the situation isn’t out of reach for the rest of us—especially with Greenwood’s advice in hand.