Cody et al v. SoulCycle Inc.
Area: Class Action & Consumer Protection
Court: Central District of California Federal Court
In a relentless effort to maximize its profits, SoulCycle, Inc. requires customers to purchase exercise sessions through an intermediate transaction whereby customers purchase an electronic certificate or credit that can be used to book exercise sessions. SoulCycle applies onerous and unlawful expiration dates to the money stored on these electronic certificates. After the certificate expires, SoulCycle removes and causes the forfeiture of the unused balance previously stored on these certificates.
SoulCycle’s expiration dates rob customers of their money, creating windfall profits for SoulCycle – the very harm that Congress and the California legislature intended to prevent by regulating the use of expiration dates on electronic gift certificates. SoulCycle’s practices violate the Federal Credit Card Accountability Responsibility and Disclosure Act, the Electronic Funds Transfer Act, and the California Consumer Protection Statute (Cal. Civ. Code § 1749.5).
SoulCycle’s profitability is driven by selling customers electronic stored value devices that are issued on a prepaid basis in specific denominations, which can be used for exercise sessions (“Series Certificates”). In 2014, SoulCycle sold roughly 93.7 million dollars of these Series Certificates. Although SoulCycle is careful to avoid calling these prepaid devices “certificates,” instead referring to the prepaid devices as a “Series,” SoulCycle’s intermediate devices function as a gift certificate as defined under federal law and state law.
SoulCycle deceptively claims that it offers customers “a pay-as-you-go system.” However, instead of allowing customers to purchase classes directly or pay for classes when they are booked, SoulCycle forces customers to purchase an intermediary device (the Series Certificate) for specific dollar amounts. SoulCycle then subjects the balance that is stored on the Series Certificate to onerous and unlawful expiration dates. Customers unable to use their Series Certificates before the expiration date are penalized by forfeiting the entire balance that has gone unused, which is often hundreds or thousands of dollars.
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