NZ$1.12 million fine against CityFitness is a sharp reminder that headline prices must be genuinely obtainable.

The Commerce Commission (Commission) continues to tighten its focus on headline pricing, securing a NZ$1.12 million fine in the District Court (Court) against CityFitness for misleading consumers about the true cost of its memberships in breach of the Fair Trading Act 1986.

What did CityFitness do?

CityFitness advertised gym memberships from $6.99 a week while also charging new members a compulsory 3% “transaction fee” on top of that. This hid true headline prices from customers and created a misleading impression that the fee was a surcharge relating to choice of payment when its actual purpose was to lift revenue while preserving a low headline price. The Commission estimates the fee affected more than 125,000 members and generated approximately $1.6 million in additional revenue.

How has the case progressed?

In September 2025, we reported on the factual background of the case when charges were originally filed by the Commission. You can read our earlier commentary on the case here.

CityFitness has since pleaded guilty to a number of the charges. A hearing was held on 30 April 2026 to determine the appropriate penalty, for which the sentencing decision has just been published.

How did the Judge come up with the penalty?

There were eight charges at issue in this case. Multiplied by the maximum theoretical penalty of $600k per charge, this meant the maximum theoretical penalty was $4.8 million.

The Judge assessed the starting point for considering penalties based on the conduct involved and previous analogous cases. The Judge determined the starting point here to be $1.5 million, which is clearly well below the maximum theoretical penalty above. In formulating this starting point, the Court emphasised the deliberate and potentially reckless nature of the conduct, the involvement of senior decision-makers, and the scale and duration of the misleading pricing.

The Judge then applied a 25% discount for an early guilty plea and 10% discount for co-operation and previous good character.

The Court then considered whether an uplift was justified based on the financial capacity grounds of the company and to ensure the penalty had sufficient deterrent effect. While the Commission sought an uplift of 25%, the Judge imposed a lower uplift of 15%.

This resulted in a final penalty of NZ$1.12 million.

Why this matters

The practical messages of this judgment are clear:

• Businesses should ensure that unavoidable fees are included in the advertised headline price.
• If a charge is described as a surcharge or transaction fee, that label must be accurate and defensible

This case reflects the Commission’s increasingly hard line on headline pricing practices that understate real costs to consumers. Businesses using mandatory add-ons, surcharges, or “from” pricing should expect close scrutiny as to whether the total price is presented clearly and accurately.

If you would like to understand what this decision means for your own headline pricing, please get in touch with one of our consumer, regulatory and competition team members.

Special thanks to Jenna Bernstein for her assistance in preparing this article.