HI SB2770

Requires health clubs to maintain a surety bond, irrevocable letter of credit, or guaranty agreement secured by a certificate of deposit of at least $100,000 to protect members who lose prepaid fees if the club ceases operation.

Exempts health clubs from the security requirement if they do not collect payment for more than one month of service, do not collect annual or other fees totaling more than $200, and do not collect payments identified as payment for specific future monthly services.

Mandates that the surety bond, letter of credit, or certificate of deposit be issued by a surety authorized to do business in Hawaii or from a Hawaii state or federally chartered bank, and must be provided as a single instrument rather than multiple bonds.

Requires health clubs to notify the director within fifteen business days of cessation of operation and provide a list of members, copies of all membership contracts, and records of all payments received.

Allows sureties, banks, or guarantors to be released from liability sixty days after serving written notice to the director, and limits member claims to one year from the date the health club ceases operation.