Debit card fraud making life hard for Easthampton gyms that automatically bill members
Berit Nowicki, who is the general manager of Snap Fitness in Easthampton, demonstrates exercise equipment while giving a tour of the gym to Dennis and Maria Curtin-McKenna Tuesday. Purchase photo reprints »
Berit Nowicki, who is the general manager of Snap Fitness in Easthampton, adds to a board that offers fitness tips Tuesday. Purchase photo reprints »
Berit Nowicki, who is the general manager of Snap Fitness in Easthampton, moves an exercise ball Tuesday at the gym. Purchase photo reprints »
EASTHAMPTON — Since April, thousands of people have been issued new debit cards — sometimes several times — due to a rash of data breaches at certain Easthampton and Southampton retailers. Once a compromised card is replaced, it falls to debit card holders to change their card information with every place that uses an automatic withdrawal — like a fitness center, for example.
Sometimes, they forget, said Berit Nowicki, general manager of Snap Fitness at 39 Union St., a 24-hour gym where key cards don’t work when the cards are declined.
“We get some really frustrated customers who show up at the gym at 6 a.m. Monday morning, all ready to go, and they can’t get in,” Nowicki said. Other members are not allowed to let them in for security reasons, she said.
“Every time a member comes in to update their membership info, I get the same story about the credit card fraud in Easthampton,” she said.
The problem with automatic billing is just one on a list of side effects of the data breach in Easthampton. In addition to the inconvenience of needing to obtain a new card each time the old one is compromised, some card holders have had to be reimbursed by their banks for fraudulent charges on their accounts.
While local leaders said they do not believe the breach is affecting customers’ willingness to shop in Easthampton and Southampton, several people interviewed by the Gazette said they have adopted a practice of only using cash when shopping in town. One person said a friend was boycotting businesses he suspects were breached.
Representatives of local banks and the Massachusetts Bankers Association have said they suspect hackers found a way to infiltrate businesses’ computer or card-reading systems to collect customers’ card information, which is then used for fraudulent purposes.
Banks and law enforcement officials have refused to name the businesses they suspect, saying they can not be certain they are to blame.
Implications of breaches
At Snap Fitness, the number of customers whose cards were declined has increased notably this summer, Nowicki said. Last month, 19 percent of the members had their cards declined for various reasons, although Nowicki said the card replacements are mostly to blame.
The problem costs the business time and money, Nowicki said, starting when the cards are automatically billed on the first of the month.
“We start every month thousands of dollars behind,” she said. “It’s very frustrating because instead of adding new programming for our members or recruiting new members, I spend the first 15 days of the month trying to catch up on billing.”
That involves calling and emailing customers whose cards were declined and trying to be available at the gym for them to update their card information.
To solve the problem, she has been encouraging customers to set up a bank draft so the business can automatically bill their account, instead of their debit card. All new members who do monthly billing are required to pay this way, she said.
It is just as secure as a debit card charge, Nowicki said, but people’s trust has been so shaken by the data breach that some people are wary.
“I hear people say, ‘I only use cash and check, I only use cash and check,’ ” she said.
Meanwhile, Lynn Starr, chief information officer at Easthampton Savings Bank, said her bank recommends that customers authorize monthly payments through their banks’ automatic billing systems. That way, they are not giving their card or account numbers to businesses, but instead authorizing their bank to make the payments.
“The less they give their card numbers out to merchants, the better,” she said.
Starr also said that the amount of fraudulent activity has been decreasing lately, due both to increased fraud monitoring and retailers who have upgraded their security systems to stop the breaches.
While some businesses which have not fixed the problem continue to leak customers’ card information, Starr estimated that the reports of fraud are about half as frequent as they were at the peak in May and June.
Nick LoCascio, owner of FitBody Easthampton, a gym at 396 Main St., has also noticed an increase in the number of clients who have to update their card information after their cards are declined during automatic billing. But since his clients can update their accounts online and do not have to worry about getting locked out of the gym, it has not had a huge impact, he said.
“We’ve been open since December 2013 ... Over the last three months was when I started noticing it,” he said. “For me, it’s not affecting my business, it’s just more of an inconvenience for customers. It’s one more thing they have to remember to do” when their cards are compromised.
Of his approximately 150 clients, LoCascio estimated that 10 percent have had to update their card information so they can be automatically billed.
“That’s pretty significant,” he said.
Other area businesses that automatically charge customers’ debit cards told the Gazette on Thursday that they have not noticed an uptick in the number of cards getting declined in recent months. Those include other gyms and yoga studios, heating fuel companies, self-storage facilities and trash pick-up firms.
Beverly Moulton, office manager at Alternative Recycling in Leeds, said she has not noticed an unusual amount of declines for curbside pick-up customers in Easthampton.
“Every so often a card doesn’t go through and we have to call them,” she said. “When the Target fraud happened, we had a good handful of people affected.”
Nowicki, also director of operations at four other Snap Fitness clubs in New Hampshire, Maryland and California, said the problem of increasing card declines is only an issue at the Easthampton location.
“Typically, we can expect a 3 to 5 percent decline rate at any of our clubs on the first of the month, in part due to insufficient funds, but mostly due to changes in credit card info, such as a new expiration date or a completely different card number,” Nowicki said.
She said a decline rate of 8 to 10 percent is considered to be “extremely high,” and the rate in Easthampton from January to May was around 10 percent. During the summer, it climbed to 13 percent before spiking at 19 percent in July.
When customers’ cards are declined, Nowicki calls and emails to ask them to call or stop by the gym to update their card information. But for some people, getting there during office hours is not easy and the gym does not allow customers to update their information online.
While most people do update their card information, some will never respond to renew their membership, Nowicki said. “Usually about one-third of them don’t come back,” she said, although that could be for various reasons.
Rebecca Everett can be reached at email@example.com.