California SB 478 aka “No More Junk Fees” effective July 1, 2024, and Coming soon to other jurisdictions.
On July 1, 2024, a new California law will go into effect that will change how added fees, such as service and delivery fees, must be disclosed to California consumers. SB 478 prohibits displaying an initial price for a good or service that does not include “all mandatory fees or charges,” other than taxes or government fees and shipping fees, with limited exceptions. In short, SB 478 makes it illegal to advertise a low initial price for a product or service and then charge additional mandatory fees later in the checkout process.
What businesses does SB 478 apply to?
SB 478 applies to the sale or lease of most goods and services that are for a consumer’s personal use, including event tickets, short-term rentals, hotels, restaurants, and food delivery, among others. The only express exceptions apply to food delivery platforms and vehicle rental companies, dealerships, and leases.
Can Business still charge fees?
SB 478 is “not a price control law.” Businesses are free to set prices, including charging fees, but the posted price must include all fees that consumers are required to pay.
What constitutes a “mandatory” fee or charge?
Although not explicitly defined in the statute, mandatory fees or charges include those that consumers are required to pay without receiving optional or additional services or features (such as a delivery service) or that are not contingent on later conduct by consumers.
How can a business comply?
Businesses can comply with the law by listing the total price for a good or service and noting that total price includes certain fees. On the other hand, businesses cannot comply with the law by simply including a disclosure that additional fees will apply at checkout.
What relief is available?
Consumer lawsuits under SB 478 may be brought under the CLRA on an individual or class basis and seek (i) actual damages (minimum of $1,000 for total award in class actions), (ii) injunctive relief, (iii) restitution, (iv) punitive damages, and (v) attorneys’ fees.
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Here's what to know for online bookings!
YES!
In the package booking example below, you will see the package price advertised on the left is $23.94 per person, fees included. When you go to checkout, you can still see the break down of the subtotal, taxes, & fees. The price at checkout matches the advertised price with fees. Therefore, this is a complaint with SB 478.
In the reservation booking example below, you will see the package price advertised on the left is $50/lane. When you go to checkout, a junk fee is not added in. The price at checkout matches the advertised price with fees. Therefore, this is a complaint with SB 478.
Also, remember for events!
If you are sending guests an event menu, for which you are writing a proposal that includes event service fees. The price on the menu MUST include the service fees IN the price.
NO!
In the package booking example below, you will see the package price advertised on the left is $398. However, when you go to checkout, a junk fee is added in. This is a violation of SB 478.
In the reservation booking example below, you will see the package price advertised on the left is $65/lane. However, when you go to checkout, a junk fee is added in. This is a violation of SB 478.
If you need help becoming compliant with sb478 and banning your junk fees, please contact your events team today!
Other frequently asked questions
What about mandatory fees charged by restaurants?
If a restaurant charges a mandatory fee, it must be included in the displayed price. Under the law, a restaurant cannot charge an additional surcharge on top of the price listed. Gratuity payments that are not voluntary must be included in the list price.
What about tips or gratuities left voluntarily by customers?
Can a business exclude from the advertised or listed price mandatory charges that will be used to pay business costs, such as healthcare insurance or benefits to employees
No. The listed or advertised price must include all mandatory charges except for reasonable shipping costs for physical goods and taxes and/or fees that the government imposes on the transaction, such as sales tax. A business is free to provide a subsequent breakdown of the business’s intended use of the various fees.
Is the resale of goods, such as event tickets, on an online platform subject to the law?
Yes. SB 478 prohibits advertising a price that is less than what a consumer will have to pay for a good or service. It applies equally to online and brick-and-mortar businesses, as well as to the resale of event tickets and other goods and services.
WHAT CAN BE EXCLUDE FROM THE ADVERTISED PRICE UNDER THIS LAW?
The listed or advertised price does not need to include taxes and/or fees that the government imposes on the transaction, such as sales tax. In addition, the listed or advertised price does not need to include reasonable shipping costs for physical goods.
Which businesses need to follow this law?
It applies to event tickets, short-term rentals, hotels, restaurants, and food delivery, just to name a few prominent industries. The law does not apply to the purchase or lease of goods or services for commercial use, or to certain other specified transactions and industries that are already subject to other laws governing pricing.
Does the new law limit what types of fees a business can charge?
No. A business is generally free to charge however much it wants and can then provide a breakdown of the various fees that are included in its listed or advertised price. But the posted price must include the full amount that a consumer must pay for that good or service.
Can a business comply with this law by disclosing additional required fees before a consumer finalizes a transaction?
No. The price listed to the consumer must be the full price that the consumer is required to pay.
Can a business comply with this law by advertising the total price for a good or service and separately noting that the total price includes certain fees and charges?
No. The price advertised to the consumer must be the full price that the consumer is required to pay.
CAN A BUSINESS COMPLY WITH THIS LAW BY DISCLOSING ADDITIONAL REQUIRED FEES BEFORE A CONSUMER FINALIZES A TRANSACTION?
Yes. The price advertised to the consumer must be the full price that the consumer is required to pay. But the law does not limit a merchant’s ability to include fees or charges in that total price, or to tell consumers that its prices include those fees or charges.No. The price listed to the consumer must be the full price that the consumer is required to pay.