Physical’s directors arrested over potential trade description violations

Hong Kong customs has arrested two directors of the recently closed gym chain "Physical" (舒適堡) on suspicion of wrongly accepting payments when selling fitness and beauty services.

A male and a female director of the fitness and beauty group, aged 67 and 68 respectively, have been arrested under the Trade Descriptions Ordinance (TDO) for unfair trade practices, with investigations into potential other criminal offences.

Amidst allegations revolving around Physical's failure to provide prepaid services to customers, Customs formed a dedicated team to investigate the case. It found that the chain group still accepted payments for prepaid services from customers even before the announcement of its business suspension. Customers who had purchased prepaid fitness and beauty services were unable to use the services concerned and did not receive any refunds.

Meanwhile, Hong Kong Customs and the police have set up an interdepartmental dedicated investigation team to conduct investigations into offences under the TDO with respect to the unfair trade practices and whether other criminal offences are involved respectively.

Don’t miss: HK gym chain Physical's closure garners complaints involving HK$31m

The Consumer Council received a total of 2,429 complaints related to the abrupt shutdown of Physical as of yesterday (11 September) at 6pm, involving HK$86.41 million, according to multiple media reports such as Ming Pao. The average amount per case is approximately HK$355,000, with the highest single case involving HK$1.81m and the lowest involving HK$99.

Speaking on RTHK’s programme 千禧年代, Gilly Wong (黃鳳嫺), chief executive of the council, said the case involving the largest amount concerns a female complainant who purchased over 1,900 personal training sessions, including boxing, stretching, and weightlifting, with classes scheduled until 2050. She also signed a 13-year membership starting in 2026.

The council has only been able to contact the customer manager of Physical and has not yet reached the person in charge, Wong said. She urged the company to promptly update consumers about the follow-up arrangements.

As of noon yesterday, Customs received 900 reports related to prepaid fitness and beauty services totaling over HK$38 million, with amounts ranging from HK$1,000 to HK$1.8 million, according to Ming Pao. Meanwhile, the police have received reports from 20 individuals regarding membership, coaching, and beauty services, with losses between HK$2,000 and HK$660,000.

MARKETING-INTERACTIVE has reached out to the Consumer Council, Hong Kong Customs and the police for a statement respectively. 

Meanwhile, Physical is facing a lawsuit for HK$6.73m for allegedly failing to pay rent and other charges at its Sha Tin branch. According to multiple media reports such as on.cc, the MTR Corporation, which owns Physical’s Sha Tin branch, has accused Physical of not settling four months of rent and expenses, as well as shutting down the branch last Friday (6 September) without MTR’s prior consent.

MTR said it signed a three-year lease with Physical to operate the Physical gym on the entire third floor of Metro City Plaza (連城廣場) in Sha Tin, as well as 19 retail units on the fourth floor for the Physical beauty centre, with a monthly rent of HK$1.319m.

According to the reports, Physical has owed over HK$4.07m in monthly rent since 1 June 2024, along with HK$1.41m in management fees, as well as charges for air conditioning, advertising, and rates, totaling HK$6.736 million. The gym chain also shut down the two branch units without prior notice to MTR. 

MTR has filed a lawsuit requesting the court to order Physical to repay the owed amount with interest, return the keys to two branch units, and compensate for the breach of contract.

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