They Want Their Money Back, Now What? How to Handle Chargebacks in Your Fitness Studio
There aren’t many words that elicit an immediate response from studio owners quite like “chargeback.”
I remember my first one, and it was almost a decade ago (Hi Olympia, I hope you’re doing…well). The chargeback landed in my inbox, and my stomach sank. The dispute was over a membership the client had obviously purchased, and I remember feeling confused at first. This was obviously a mistake, right? She hadn’t used her package, but she did buy it and let it expire. And now she wanted her money back and was using her credit card company to do the dirty work.
I was furious. She had bought it in person, and I manually rang her up. And, of course, I was scared. Because I was a brand-new business owner, every $100 counted, and I wasn’t sure I'd win the dispute (spoiler: I didn’t).
If you’ve experienced this, you know the feeling. If not, let’s ensure you’re protected beforehand.
What the SoulCycle Case Taught the Whole Industry
In 2015, Rachel Cody purchased a single SoulCycle class for $30. It expired after 30 days, unused. SoulCycle kept the money, and Rachel sued.
What followed became one of the most referenced legal cases in boutique fitness history. The court ruled that SoulCycle’s class packages functioned as gift certificates, making them subject to the federal Credit Card Accountability, Responsibility, and Disclosure Act (CARD Act), which prohibits expiration periods shorter than 5 years. SoulCycle settled for up to $9.2 million, reinstating classes or paying $25 per expired class to nearly 150,000 affected customers.
SoulCycle isn't a boutique studio. But the legal principle that came out of that case applies to studios of every size.
The Key Legal Distinction You Need to Understand
When I have a legal question about boutique fitness, I head straight to Matthew Becker at Gym Lawyers PLLC because he has the unique advantage of speaking both boutique fitness and law fluently. According to Matthew, the label you put on a product matters far less than how it actually functions:
"In most states, whether package expirations are enforceable depends on how the package actually functions, not the name used. If the package acts as prepaid value and the expiration causes someone to lose paid value, it is often regulated like a gift certificate. What matters most are the checkout disclosures and how the product works in practice, not the label on it."
In other words, if a client pays you $150 for a 10-class package and those classes expire while you keep the full payment, many states legally treat this as a gift certificate, regardless of the product's description.
Matthew shared one clever legal distinction that's worth knowing. If you sell a “Buy 10, get 2 free” package, you can legally apply an expiration only to the 2 free classes. This is because the client did not pay for those 2 classes, so removing them does not affect the paid value. The risk applies only to the portion for which clients paid.
What Actually Gets Studios in Trouble
It’s rarely the policy itself that causes the problem. Matthew puts it plainly:
“Studios don’t usually get in trouble for having policies; they get in trouble when they hide the policy before purchase or when the studio’s software and staff enforce something different than what the customer was told.”
The three most common mistakes:
Expiration terms buried in a PDF or waiver that clients sign without reading.
Booking software that displays terms differently from what’s on your website.
Staff enforcing policies they’ve never actually been trained on, and a lack of consistency.
Pro tip: conduct a consumer path audit. Walk through your entire purchase flow as if you’re a brand-new client on both mobile and desktop. Make sure your expiration policy is visible before the transaction is complete, not buried in the confirmation email that nobody reads.
Every studio owner eventually asks:
So, Can Class Packs Expire?
Yes, most of the time, but there are important conditions, and your best bet is to find an attorney (like gymlawyers.com) to check on the rules for your state.
Here's the clearest breakdown:
Your expiration policy is on solid ground if:
Your state law allows it (more on that below).
The window is reasonable - 6 months is the practical safe zone.
The terms are clearly disclosed before the client pays, not tucked away in a waiver or confirmation email.
Your expiration policy is high risk if:
The window is short - 30 to 60 days on paid value is thin ice.
The terms aren't visible at checkout.
Your booking software, your website, and your staff aren’t in agreement.
Your expiration policy is likely unenforceable if:
You're in California or another state with strict gift certificate laws.
The expiration causes a client to forfeit money they actually paid (not bonus classes or free add-ons), but real money they handed you.
That last point is where the SoulCycle case did the most damage. The court didn't say class packs can never expire. It says you can't take someone's paid value that they didn’t use after 30 days and call it a “policy.”
What To Do When a Client Wants Their Money Back
First, take a breath. How you handle this conversation matters almost as much as whether you're legally in the right. If a client comes to you directly (before filing a chargeback), you have a chance to resolve it without the bank getting involved.
On reinstatement: If the classes expired recently and the client has a reasonable explanation, reinstating their classes is almost always cheaper than a chargeback, a dispute fee, or a one-star review. It doesn't have to become a standing policy- it's a judgment call that protects the relationship and your reputation.
On refunds: Remember, in most states, you are not automatically required to refund expired classes- but whether you're legally protected depends heavily on your state’s laws and how clearly your terms were disclosed at checkout. When in doubt, a goodwill refund is often the smarter business move.
The reality is that, sometime in your studio-owner career, someone is going to ask for their money back. Your goal is to have clear enough policies that when they do, you're protected and can decide what to do based on the situation.
What About Chargebacks Specifically?
Chargebacks happen when clients dispute a charge with their credit card company instead of coming to you first. They're frustrating, time-consuming, and often come with a "the customer is always right" default from the bank.
Your best protection is documentation:
Expiration terms visible and acknowledged at checkout (a checkbox beats a buried link)
Confirmation emails that restate the policy
A clear process for clients to freeze or extend
The more paper trail you have showing the client understood the terms before they paid, the stronger your case, but credit card companies usually side with the client.
Additional Considerations
A few other areas that create similar exposure:
Auto-renewals: If you auto-charge memberships, clients must be clearly notified before renewal and given an easy way to cancel. The FTC's click-to-cancel rule was finalized in 2024 but struck down by a federal appeals court in 2025. That said, several states, including California, New York, and Colorado, have their own auto-renewal laws that still apply.
Blanket "no refund" policies: A flat "all sales final" policy can backfire in states with consumer protection laws that override it, like if you close, cancel classes, or can't deliver the service.
Freeze-and-hold policies: Vague language around medical holds or freezes creates opportunities for dispute. Be specific about what qualifies, how long, and what happens to unused sessions.
The Bottom Line
You don't need a $9.2 million lawsuit to feel the impact of unclear policies. One chargeback, one bad review, or a "I didn't know it would expire" conversation is enough to cost you time, money, and a client relationship.
In most cases, your expiration dates will stand up, but your policies need to be visible, reasonable, and legal in your state. But, at the end of the day, a dispute over 5 unused classes often isn’t worth the bad press. If you're not sure whether your current setup creates exposure, that's exactly what an attorney is for.
This article is for general educational purposes only and does not constitute legal advice. Consumer protection laws vary significantly by state and country, and this content cannot account for every jurisdiction or situation. For guidance specific to your studio, please consult a qualified attorney - not AI.
For fitness-specific legal guidance, Niki recommends Matthew E. Becker at Gym Lawyers PLLC. You can schedule a consultation at gymlawyers.com/contact.
