(1) Every center which enters into prepaid or credit contracts for physical fitness services of over three months' duration or over two hundred dollars in amount shall maintain with the administrator a surety bond in a sum to be determined by the administrator based on the estimated future costs to service contracts sold, but not to exceed fifty thousand dollars.

(2) In lieu of the bond required in this section, the center may furnish under penalty of perjury information which reasonably demonstrates financial responsibility as will enable the center to satisfy the possible claims against the bond. In the event the center is controlled by, under common control with, or controls other corporations and the other corporation agrees in writing to satisfy the claims against a bond allowed under this section, the financial responsibility of the other corporation must be considered in determining the requirement for a bond. In determining whether the center has the requisite financial responsibility, the administrator may consider the operating and business history, reputation, and management within and without the State, as well as the operating and business history and reputation of any business controlled by, under common control with, or controlling the center. The provisions of subsections (1) and (2) of this section do not apply to physical fitness service facilities that have been in operation for five years or more on the effective date of this Chapter.

(3) Each center is required to notify the administrator upon substantial change of its financial status and to submit an annual report.

(4) No person may offer physical fitness services in this State without first obtaining a certificate of authority from the administrator. A certificate of authority must be issued by the administrator upon submission of items (a) through (f) of this section. The applicant must submit:

(a) A formal application for the certificate in such form and detail as the administrator requires.

(b) A certified copy of its charter or articles of incorporation and its bylaws, if any.

(c) If a corporation, a certified copy of the certificate of authority or good standing certificate from the Secretary of State of South Carolina.

(d) A copy of its membership agreement.

(e) A copy of any contract to be issued.

(f) A list of outlets at which physical fitness services will be offered.

(g) Any other relevant information required by the administrator.

(5) No certificate of authority may be issued by the administrator until the center pays an initial certificate of authority fee of fifty dollars an outlet. Certificates of authority may be renewed upon payment of an annual renewal fee of fifty dollars an outlet on or before December thirty-first.

(6) A copy of the Certificate of Authority required by this chapter must be posted conspicuously at every location where monies or contracts are received by the center.

(7) It is unlawful for any center or person acting on behalf of a center required to obtain and maintain a Certificate of Authority under this chapter to advertise, sell, or offer to sell the use of physical fitness services when a valid certificate is not on file with the administrator.

(8) The administrator may file a request for a contested case hearing with the Administrative Law Court to obtain a cease and desist order or an order revoking, suspending, or vacating the certificate of authority of a center, if the department determines that the center has violated or failed to comply with any provision of this chapter or regulation promulgated under the authority of this chapter or if the department shows that:

(a) a document or declaration required by subsection (4), items (a) through (g) were false or misleading; or

(b) by clear and convincing evidence the center or its agents, officers, or employees have engaged in false, fraudulent, or deceptive conduct in its dealings with customers.

(9) Instead of revocation, suspension, or refusal to continue a certificate of authority of a center, the administrative law judge may assess an administrative penalty for a violation of subsection (4) or (8) of this section not to exceed five hundred dollars for each violation, not to exceed five thousand dollars for matters commenced in any calendar year. These penalties may be assessed in connection with orders to cease and desist.

HISTORY: 1985 Act No. 165, Section 1; 1991 Act No. 142, Sections 27, 28; 1994 Act No. 312, Section 2; 2005 Act No. 128, Section 16, eff July 1, 2005.

Editor's Note

2005 Act No. 128, Section 27, provides as follows:

"This act takes effect on July 1, 2005, and applies to all licensing and administrative hearings involving the South Carolina Department of Consumer Affairs."