Are Hidden Fees or “Junk Fees” Illegal in California?

Guide to the Law on Hidden Fees and Charges in California

On October 7, 2023, California Governor Gavin Newsom signed Senate Bill 478 (SB 478) into law, which bans so-called “junk fees.” This law is effective as of July 1, 2024.

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What are Junk Fees?

“Junk fees” generally refers to any hidden charges, surprise fees, service fees, processing fees, surcharges, or additional costs that consumers were not aware of until it is time to pay the bill.

These fees may occur at online checkout or when purchasing goods or services in person. They are often added to restaurant bills as “employee health fee” or to hotel bills as “resort fees,” or to the purchase of concert tickets as “processing fees.” These fees can be misleading, making advertised prices appear lower than the actual total cost. The new law aims to address this issue and promote transparency in pricing.

Are Junk Fees Illegal in California?

SB 478 amends the California Consumers Legal Remedies Act (CLRA) to generally ban so-called “junk fees.” Effective July 1, 2024, the California law prohibits businesses from advertising, displaying, or offering a price for a good or service that does not include all mandatory fees or charges (except taxes or government-imposed fees). This is also known as “drip pricing” or “bait and switch” advertising.

Will this make prices cheaper?

No, businesses can generally still set prices as they wish, as long as they don’t price gouge (see our Guide to Consumer Rights), and as long as they tell consumers the full price upfront.

Why is this Necessary for Consumer Protection?

By banning junk fees, the law aims to protect consumers from deceptive pricing practices. Consumers will have clearer information about the true cost of products and services, allowing them to make informed decisions.

Further Resources

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Photo credit: Photo by Jessie McCall on Unsplash

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