Home > National > Social Affairs

No refunds, no solutions: 'Pilates scams' exploit holes in Korean legal system

Published: 25 Apr. 2025, 11:37 Updated: 25 Apr. 2025, 13:39

A Pilates studio in Gwangju on Jan. 30, 2023 [NEWS1]

One consumer paid 1.89 million won ($1,319) for 36 one-on-one Pilates sessions in November 2023. Less than a month later, they received a text message announcing the studio’s closure. They were unable to get a refund for the unused sessions, and the business owner became unreachable.

Another consumer paid 2 million won for a similar package of 36 one-on-one Pilates sessions. Two months later, the studio notified clients of its impending closure and offered a partial refund — in addition to deducting a 10 percent penalty fee. Although the contract was effectively terminated due to business closure, the owner imposed an unfavorable refund policy.

These are representative examples of what the Korea Consumer Agency (KCA) calls “Pilates scams,” which were reported in 2024. In many cases, owners continued to sell long-term packages even though they were already preparing to shut down operations, subsequently disappearing and leaving consumers to bear the financial losses.

As domestic demand remains sluggish and market competition intensifies, cases involving the closure of gyms and Pilates studios have surged. According to the KCA, under the Fair Trade Commission, claims related to gym closures rose from 2,406 cases in 2021 to 3,412 in 2024. Claims involving Pilates services nearly doubled over the same period — from 662 in 2021 to 1,036 in 2024.

However, securing any form of compensation after a studio goes out of business remains elusive for most consumers. Data from People Power Party lawmaker Kim Jae-sub’s office, provided by the KCA, shows that out of 275 Pilates-related claims filed in 2024 due to business closure, only 61 cases resulted in any resolution — such as refunds, contract termination, contract fulfillment or correction of unfair practices.

Another 143 cases were deemed unresolvable. In effect, eight out of 10 consumers received no meaningful resolution.

The amount actually refunded to clients totaled only 34.3 million won — about 10 percent of the total disputed contract value of 282.5 million won.

“The cases reported to the KCA are just the tip of the iceberg,” said Rep. Kim. “Business closures are increasing due to worsening economic conditions, as recent police investigations have also revealed.”

“If the business operator does not respond, there’s essentially nothing we can do,” said a representative from the KCA. “In most cases, we don’t even register the case and instead guide the consumer toward civil or criminal procedures. When a business has closed, even sending an official document results in a return-to-sender. There is no way to resolve it.”

Among cases related to business closures in 2024, Pilates accounted for 142 claims — far more than gyms with 88 and yoga centers with 24.

Experts say this reflects a regulatory blind spot for Pilates studios. Unlike registered sports facilities, Pilates studios fall under the category of unlicensed businesses that do not require municipal approval to open or close. As a result, local governments often have no information about the operators, making it difficult to identify or track them when issues arise.

Legal revisions are needed to close the gap. However, proposed legislation requiring mandatory insurance coverage and reclassification of Pilates studios as regulated sports facilities has remained pending in the National Assembly for more than six months. A separate government proposal being prepared by the Ministry of Culture, Sports and Tourism has yet to be formally introduced.

For now, the most practical recourse for consumers is to pay in installments.

“If you use a credit card and choose installment payments, you can immediately exercise your right to withhold payment on the remaining balance,” said Lee Yu-jin, a team leader at the KCA. “Avoid excessively long-term contracts. If a studio does not allow installment payments, it could be because credit card companies have blocked the merchant due to too many complaints.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY KIM YEON-JOO [[email protected]]