In a high-level Internet “business opportunity,” late-night web spokesperson Don Lapre had been touting a get-rich-quick sales business in which consumers paid for the chance via the web to sell big-ticket fitness equipment the likes of Northern Lights, Hoist, Spirit and Diamondback.
The only problem was that the companies SNEWS talked to whose product was on the password-protected web site didn’t know it was ever there, or found out by chance and had demanded it be pulled. After more than 18 months in operation, FitnessGear4Less.com shut down its websites last month and is not answering phone numbers SNEWS obtained through business records for its umbrella company, Universal Business Strategies (UBS), based in Phoenix, Ariz. The mailbox for UBS’ 800 number is full.
“FitnessGear4Less is a straight-up con game. They’re criminals,” Woody Fisher, national sales manager for Spirit, told SNEWS. “It makes everybody in the fitness industry look bad.”
In addition, the company’s filing on March 10 for Ch. 11 reorganization under the federal bankruptcy act was dismissed and the case was closed on July 18 when UBS hadn’t filed the necessary papers. “It’s as if the bankruptcy had not been filed,” U.S. bankruptcy court trustee Richard Cuellar told SNEWS.
“They just ceased operations,” Tim Thomas, the company’s former creative director who was “terminated” in March when the company went bankrupt, told SNEWS. “There were lots of upset people, and they never got what they paid for.”
Thomas claimed that UBS had at least $750,000 in refund liabilities due people who had paid for the “opportunity” to place ads, to be told how to promote a business and, in this case, to get passwords to the FitnessGear4Less website to sell equipment — most of which was not approved to be on the site and much of which was channeled to the site by area fitness retailer Fitness Source owner Jim Fischer, who closed his stores in June.
In addition, SNEWS knows of at least one complaint filed with the U.S. Federal Trade Commission, although the FTC won’t comment on any pending investigations, only actions taken. Also, the Better Business Bureau of Central/Northern Arizona has a lengthy file on UBS detailing consumer complaints, lack of response by the company, inability to get refunds, bankruptcy filings and delivery delays.
Fischer, who is now independently outfitting commercial fitness facilities, said the group contacted him to get equipment for the company to sell since he was in the area. Fischer not only provided equipment, but also allowed his likeness to be used on a FitnessGear4Less TV commercial where he told viewers how he’d made money selling that very equipment. He also told SNEWS that he “made it very clear” he wouldn’t ship equipment to areas where it would compete with other dealers, but “I didn’t get involved in the day-to-day operations.”
He called the organization “pathetic.” “They didn’t do a grand volume — maybe only two or three pieces a month,” Fischer said.
How the scam worked
UBS, formerly known as New Strategies, was bought in July 2001 by Regency Medical Research owner Joseph Diehl. Here’s how the scam worked:
>> Consumers saw a late-night TV commercial or found the company on the web. The former home page for FitnessGear4Less said, in part: “We can put the $10 billion dollar per year fitness industry right at your fingertips. Your own fitness gear 4 less website could be on-line and available to 400 million Internet users in 24 hours or less.”
>> If consumers bit the bait, they then called the 800 number and were sold the “business opportunity,” which included information about how to promote sales and a password that you gave consumers to access the website so any sales were credited to you.
>> Packages cost from $150 to many thousands of dollars — fees which were quickly collected by the management.
>> Although touted as “best prices,” the FitnessGear4Less prices were in some cases higher than suggested retails and list prices, manufacturers told SNEWS. For example a Northern Lights K2 home gym on the website was being sold for $1,495 (plus $350 shipping), while its regular list is closer to $1,195.
Jhan Dolphin, U.S. director of sales for Northern Lights, found his company’s equipment on the site by chance when he saw a tiny classified ad in the Chicago Tribune touting best prices on name brand equipment.
“These people selling the equipment were totally misled,” Dolphin said. “They were sold a bill of goods.”
Randy Schneider, from the Memphis, Tenn., area, told SNEWS he worked the swing shift, saw the late-night ad after work in early 2002, and thought it sounded like a no-risk way to make money. He initially blamed his lack of sales on his own inability to promote the “business,” but he said every time he called UBS to complain he wasn’t making anything, he ended up being sold more product — usually at some two-for-one deal that he couldn’t resist.
“I made zero,” he said. “I kept hoping it would do something, and it never did. When I finally advertised, that’s when I found out about all this crap.”
Schneider, who estimated he lost about $3,000, said a few weeks ago he tried to call UBS repeatedly and finally got somebody who promised somebody else would “call him right back.” He waited three hours, and that’s when he said he “got suspicious.”
David Salisbury, marketing manager at Hoist, said his company didn’t know about FitnessGear4Less, but said Hoist cut Fischer’s Fitness Source as a dealer about a year ago. Fischer said he had some remaining Hoist product that he indeed put on the website. Hoist has very strict policies that do not allow Internet sales in any case, Salisbury said.
Fisher at Spirit said his company started getting calls about eight months ago from consumers who had allegedly ordered Spirit equipment but hadn’t gotten it. In one case, a woman had gotten the equipment but had a problem. That allowed Spirit to check the origination of the serial number to discover it came from Fitness Source. That led Spirit to end its relationship with Fitness Source in about February, although SNEWS found Spirit equipment on the website as late as May.
As recently as three weeks ago, Spirit’s Fisher said he got a call from someone who claimed he was from FitnessGear4Less inquiring whether Spirit was interested in being a part of a rebirth of the concept. He firmly declined. Already, on June 27, Fisher had written a cease-and-desist letter to the website, stating any placement of equipment on the site or use of logos was unauthorized and was to be taken down in 10 days or legal action would begin. That’s the last time Fisher said he saw the site and didn’t know it was now gone.
“They won’t respond,” he added. “They never responded.”
SNEWS View: Although the FitnessGear4Less name and websites are gone, don’t you worry, we are sure they will be back. Scammers like this only disappear for long enough to let people forget, to take on a new identity, and to come back for more. It is true what Barnum and Bailey said about suckers. What does this mean now? That everybody in the fitness industry should keep an eye open for anything slightly suspicious AND — we know this industry sometimes hates to actually share information — perhaps actually alert other companies if something surfaces. Or even alert SNEWS so we can investigate and alert others. We hate to say this, but it’s true: If more companies had gotten more vocal en masse earlier, it’s possible this iteration of the scam would have disappeared sooner. Now, that said, if you were scammed, you can still file a complaint by going to www.FTC.gov.