Jim Butler asks Mark S. Adams for update on California Junk Fee law: Would SB 1524 gut SB 478’s honest pricing for all?

Tell us what all the fuss is about concerning the California Junk Fee Law.

See California bans Junk Fees as of July 1, 2024. Good bye to junk fees, resort fees, mandatory service charges, and drip pricing. Hello to – the fruits of SB 478.

California was the first state in the country to adopt such a comprehensive law, and it was widely hailed as a consumer victory. However, the substantive provisions of the California Junk Fee law are scheduled to become effective on July 1, 2024. And on June 6, 2024, William Dodd (with the support of the California Restaurant Association) introduced SB 1524 to exempt the restaurant industry from the California Junk Fee Law.

See Pricing transparency without hidden mandatory junk fees. Does this apply to restaurants too? New California proposed law (SB 1524 ) says “No!” Can this be right?

Before Senator Dodd’s latest proposal, there were a couple of exemptions in SB 478 for certain highly regulated businesses who comply with their primary regulator’s detailed rules (such as broadband services complying with FTC regulations, or financial entities complying with relevant regulations such as the Financial Code, Truth in Lending or the Federal Reserve Act).

But SB 1524 is an outright exemption from SB 478 for any “items sold by a restaurant, bar, or other food service provider, or pursuant to a contract for banquet or catering services.”

The bill would permit drip pricing, as long as the additional mandatory fees are conspicuously set out in the advertisement, menu or other display.

But unless further amended, as of July 1, 2024, SB 478 will affect every other business dealing with California consumers. Of course, most of these other affected businesses feels this is unfair. Most of them disclose various mandatory fees somewhere in the sale process. It is just that they disclose them after the initial advertised price, and after the consumer has invested time in researching the goods or services, or filling in required information to get to a form. Hiding the additional fees just frustrates open competition and makes it difficult for consumers to make wise decisions.

SB 478 is only gutted as to the restaurant industry. It applies to everyone else. Is that fair? Does that serve the public?

I guess we will have to see what the California legislature decides.