ClassPass Class Action Challenges Platform’s 30-Day Credit Expiration Policy

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ClassPass faces a proposed class action lawsuit that alleges the platform’s credit-expiration policy violates federal and state laws.

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The 27-page lawsuit was filed by a San Francisco resident and former subscriber to the ClassPass platform, which sells credits that consumers can redeem for exercise sessions, wellness and beauty services and other experiences of various credit values. The ClassPass class action claims that the company’s credit policy—which permits only a portion of a subscriber’s credits to roll over in their account every 30 days and nullifies remaining credits upon membership cancellation—contravenes the Credit Card Accountability Responsibility and Disclosure (CARD) Act and Electronic Funds Transfer Act (EFTA), federal laws that prohibit the sale of prepaid gift cards or gift certificates with expiration periods of less than five years.

The case asserts that, under the terms of the CARD Act and EFTA, ClassPass credits qualify as gift cards or gift certificates and therefore cannot legally expire in less than five years. Per the complaint, federal law defines a gift card or gift certificate as an “electronic promise” that is stored in a user’s online account, prepaid and issued in a specific amount that may not be increased or reloaded, and redeemable and honored by a company for a good or service.

The ClassPass policy also violates a California law that more broadly bans the sale of gift certificates with any expiration period whatsoever, the filing contends.

Under the company’s policy, ClassPass will roll over any unused credits that an active subscriber on a monthly plan has purchased, only up to the number of credits in the upcoming plan, the lawsuit says.

“For example, if a user on a 45 Credit monthly plan does not use any of their credits during the first month, 45 Credits rollover [sic] in their account for the second month, giving them a total of 90 Credits,” the ClassPass suit explains. “However, by month three, if the user still has 90 Credits in their account, only 45 Credits will rollover [sic], resulting in a loss of 45 Credits.”

The credits have “unreasonably short expiration periods” by design, the case alleges, arguing that the policy inevitably leads to credits expiring rather than rolling over because subscribers regularly “rack up more Credits than they can possibly use in a month.”

Moreover, a consumer who cancels their ClassPass membership forfeits every credit they purchased and accumulated but did not use, the complaint shares. ClassPass offers no method to transfer unused credits to other accounts or redeem them for cash, the filing states.

The ClassPass credit expiration policy has cost thousands of users the value of credits they paid for and pressured others into redeeming them for experiences that the consumers would not have otherwise chosen had they been free to use the credits when desired, the lawsuit claims.

The plaintiff says she ended her membership in May of last year after feeling frustrated by the rapid rate of credit expiration and the fact that she couldn’t use her credits when she wanted.

The ClassPass class action lawsuit looks to represent all individuals in the United States whose ClassPass credits expired at the end of the month or at the conclusion of their membership.

Learn all about the legal process: What is a class action lawsuit?