Brazilian Prosecutors Sue Smart Fit Over Abusive Contract Terms
The Public Prosecutor's Office of Maranhão (MP-MA) has filed a Public Civil Action against the gym chain Smart Fit, alleging abusive practices against consumers with annual plans. The lawsuit, filed on Thursday, May 30, specifically challenges the 20% cancellation fee on remaining installments, a 30-day notice period, and other contract clauses that allegedly create barriers to canceling memberships. The MP-MA is seeking national validity for any ruling.
The investigation was prompted by a consumer complaint to the MP-MA's Ombudsman, which reported the 20% early termination fee, particularly for the "Plano Black." The complaint indicated a company representative claimed this fee was authorized by the Public Prosecutor's Office, but the investigation found no such authorization. Prosecutor Alineide Martins Rabelo Costa highlighted that the contracts are structured to impede consumer departures, combining annual loyalty, promotional minimum stays, future installment penalties, notice periods, post-cancellation charges, and broad automatic debit authorizations.
The MP-MA argues that canceling a contract is significantly more difficult than signing up. While initial enrollment can be done online, cancellation requires an in-person visit to a Smart Fit facility to complete a specific form. The prosecutors also contest the 20% penalty on future payments, viewing it as turning an initial discount into a potential debt. The 30-day notice period, during which customers continue to pay, and automatic contract renewals without explicit customer consent are also criticized. The action further questions annual price adjustments based solely on positive IGP-M index variations, which prevents price reductions when the index falls. The MP-MA also challenges clauses regarding automatic debits even after contract termination for alleged outstanding balances, demanding clear debt origin information and dispute channels. Additionally, the lawsuit scrutinizes the "health declaration" clause, which shifts responsibility to the consumer for assessing their fitness for exercise without adequate company guidance. The inclusion of the Skeelo platform as a "Plano Black" benefit is also flagged as potential bundled selling, and clauses concerning the collection and storage of personal and biometric data are questioned for clarity and compliance with the General Data Protection Law (LGPD).
The MP-MA is requesting an immediate court order for Smart Fit to cease charging the 20% cancellation fee, enforcing the 30-day notice, imposing automatic new loyalty periods, charging fees without clear information, and applying price increases based only on positive IGP-M variations. Failure to comply could result in a daily fine of R$15,000. The prosecutors seek the annulment of abusive clauses, contract and service channel adjustments, and compensation for collective moral damages totaling at least R$500,000, plus individual material and moral damages.
This legal action by the MP-MA against Smart Fit highlights systemic issues in consumer contract law, particularly concerning subscription services and digital access. The core of the dispute revolves around contract terms that appear to prioritize customer retention through financial disincentives and procedural hurdles, potentially creating a mismatch between the ease of initial acquisition and the difficulty of termination. Such practices can lead to consumer frustration and perceptions of unfairness, especially when combined with automatic renewals and price adjustments tied to volatile economic indicators like the IGP-M. From a market dynamics perspective, while companies aim to secure revenue streams, regulatory bodies are tasked with ensuring these strategies do not cross into exploitative territory, particularly in sectors with high consumer engagement. The MP-MA's broad request for national application suggests these practices may be widespread, indicating a need for clearer industry standards or legislative intervention to balance business interests with consumer protection rights in the evolving digital economy.
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