Because of the COVID-19 pandemic, nearly all entertainment and recreational facilities across the country have closed. These businesses often face a tough choice: (1) allow customers to cancel their accounts and risk losing customers to competitors once businesses reopen or (2) offer remote services and provide other credits, but risk an accusation (baseless or otherwise) that the business has breached its contracts with customers.

Regulation and Litigation for Subscription-Based Businesses Spurred by COVID-19

Attorneys general of Arizona, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Washington, D.C., and Washington state have issued demand letters insisting gyms stop charging customers and allow the cancellation of accounts without fees. Businesses in other states that continued to charge their customers received numerous consumer complaints and demand letters threatening litigation. Most concerning is that plaintiffs lawyers from coast to coast have already launched federal class action lawsuits against gyms, educational institutions, event promoters and ticket resellers.

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