A peloton bike
Scott Heins / Getty Images
- Peloton users filed a lawsuit against the practice firm claiming it wrongly collected sales tax.
- Customers were taxed in New York, Massachusetts and Virginia, where digital goods are tax-exempt, the lawsuit said.
- This is the latest lawsuit for Peloton after the Tread + treadmill was recalled earlier this year.
- Check out Insider’s business page for more stories.
Peloton users have filed a class action lawsuit against the exercise bike and exercise company claiming it wrongly charged its customers sales tax.
Peloton, which costs $ 39 a month for an “all-access” membership and $ 12.99 a month for a “digital” membership, illegally billed users in New York, Virginia and Massachusetts an additional sales tax 6.3% and 8.9% of court documents received from Bloomberg Law.
Since all peloton memberships are digital, plaintiffs Brannon Skillern and Ryan Corken believe that according to the lawsuit, peloton memberships have no sales tax and should be tax-exempt as “digital goods”.
While Peloton no longer charges its customers in the three states sales tax, Skillern and Corken are demanding unspecified compensation, statutory and criminal claims for damages as well as reasonable attorney fees and costs.
Peloton declined to respond to Insider’s request, stating that the company would not comment on any active litigation.
After a child was fatally injured on a Peloton Tread + treadmill in March, the company faced a lawsuit after a child was featured in its advertisement for the treadmill. According to Insider, more than 39 people were injured on the Tread + treadmill before it was recalled in May. Even so, the demand for pelotons remains strong.
Since the start of the coronavirus pandemic, the home fitness market has grown significantly as gyms closed and people exercised at home. Peloton had sales of $ 1.8 billion in 2020 and over 4.4 million subscribers on its training platforms, Insider reported. In 2021, Peloton is hoping for sales of $ 4 billion.