10 May 2024
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Note: If you are a consumer with a Junk Fee issue, please do NOT contact us! We do not represent consumers. We represent owners, developers, lenders, and management of hotels, restaurants, and other hospitality-related properties. We advise them on litigation, labor, regulatory compliance, contracts, transactions, financing, development, and strategies.
Consumers and politicians have complained about junk fees for more than 20 years. The first reports of hotels charging resort fees (or similar charges) can be traced back to the year 2000. We are not sure if hotels invented the practice or were just amongst the early innovators. But in any event, the various mandatory fees with various labels soon became widespread throughout the hospitality industry and other industries, including hotels, restaurants, food delivery services, live-event ticket sales, transportation such as car rentals and airlines, and many others.
In the hotel industry, these hidden fees have different names, such as resort fees, destination fees, or surcharges. Other industries have used labels such as service fees, delivery fees, installation fees, and administrative fees, just to name a few. But they are all “junk fees”—mandatory hidden fees that are not fully disclosed at initial customer contact but only revealed later in the sales process.
As of July 1, 2024, California will implement a high-profile law to ban such junk fees unless they are specifically exempted. Here are the details.
Junk Fees are banned in California as of July 1, 2024!
What does the California Junk Fee Law (SB 478) mean?
by
Mark S. Adams
Hotel Dispute Lawyer, Partner & Senior Member
JMBM’s Global Hospitality Group
California businesses brace for Senate Bill 478‘s impact. SB 478 was signed by Governor Newsom in October 2023 and became effective July 1, 2024. It cracks down on hidden fees, often referred to as “junk fees” and “drip pricing” (because the full cost is only disclosed drip by drip). It will likely change how businesses approach pricing strategies. Many say it is part of a nationwide response to President Joe Biden’s call to eliminate Junk Fees.
What’s in a name? SB 478 or California Junk Fee Law?
The confusion starts with how to reference the new law. Many refer to it by the Senate Bill number assigned when it was first introduced in the California Senate, and the SB 478 moniker continues to be popular with many, even after signed into law.
We also like to call it the California Junk Fee Law because SB 478 does not describe the focus of the legislation. It is really a collection of amendments to the various sections of the California Civil Code, Government Code, and Vehicle Code, as described in more detail below.
Many consumer groups and plaintiffs’ lawyers seem to refer to it as amendments to the California Consumers Legal Remedies Act, or the CRLA. Their focus is on enforcing the law and the remedies given to the government and consumers to bring private legal actions.
Still, others refer to it by the underlying prohibited practices, calling it the California law on drip pricing, hidden fees, bait-and-switch, unfair competition, unfair business practices, consumer fraud, and the like. These advocates generally include California plaintiffs’ lawyers and state and local prosecutors who largely rely on the California Unfair Competition Law (UCL) and the Consumers Legal Remedies Act (CELA) The new California Junk Fee Law is expected to facilitate new claims against businesses under these laws.
We may use all these terms interchangeably, but we tend to prefer the California Junk Fee Law. CONTINUE READING →