New California Law to Take Effect Banning Non-Disclosure of “Junk Fees”

New California Law to Take Effect Banning Non-Disclosure of “Junk Fees”

On July 1, 2024, California Senate Bill 478 (“SB 478’”), recently signed into law by California Governor Gavin Newson, will take effect. The new laws target “junk fees” and “bait-and-switch advertising.” It will bar companies doing business in California from advertising, displaying, or offering “a price for a good or service that does not include all mandatory fees or other charges” other than taxes and shipping fees.

Section 1 of SB 478 states that “[t]his act is intended to specifically prohibit drip pricing, which involves advertising a price that is less than the actual price that a consumer will have to pay for a good or service.” SB 478 specifically states, however, that it is not intended to prohibit any particular method of determining prices for goods or services, including algorithmic or dynamic pricing. SB 478 rather is intended to regulate how prices are advertised, displayed, or offered.

“Junk fee” additions are common in the event-ticketing and travel industries, where consumers are often charged vague “service” or “convenience” fees. The Los Angeles Times, for example, recently reported that a “Platinum” ticket for a concert by the rock band Blink-182 on June 16, 2023, was listed on Ticketmaster for $290. An additional $42.90 “service” fee and a $5 “processing” fee reportedly boosted the ticket price to $337.90.

SB 478 contains exceptions, and will not apply to rental car companies if they are in compliance with Cal. Civ. Code § 1939.19 (under which they are already regulated), automobile dealerships, property managers, and food delivery companies.

Violations of SB 478 will expose businesses to civil liability to consumers on an individual and class-wide basis. Existing law, namely the California Consumers Legal Remedies Act (“CLRA”), Cal. Civ. Code § 1750 et seq., which SB 478 amends, allows a person, individually or on a class basis, to recover actual damages or $1,000, whichever is greater, per violation. Other remedies under the CLRA include injunctive relief, restitution, attorneys’ fees, and punitive damages. All of these remedies will be available to SB 478 plaintiffs.

We expect a future wave of class action lawsuits in California for violations of this new law. Plaintiffs’ class action attorneys will be eager to present such claims to juries, especially since “junk fees” are not popular, and because the potentially recoverable damages are substantial. The recent trend in civil litigation is for California juries to show an animus against large corporations by imposing large verdicts against them. We think that this would also be the case in lawsuits involving “hidden junk fees.” Businesses are thus encouraged to closely review all of their advertisements and price quotes to ensure that all fees are fully disclosed to consumers.


James Carty | Paul K. Schrieffer

Share This Story, Choose Your Platform!