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19 December 2024

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Junk Fee Litigation.

NOTE: We represent the owners and operators of hotels, restaurants, and other hospitality facilities. We do not represent consumers making claims against such businesses. When it comes to junk fee laws at the state or national level, we help the owners and operators of hotels, restaurants, and hospitality facilities understand and comply with them. When claims are made against them by consumers or competitors, we advise on strategies and defense of such claims.

Finally!

 

The Federal Trade Commission (FTC) has been critically looking at “junk fees” for a long time. Over several years, it proposed banning “Unfair or Deceptive  Fees” across many industries. However, on December 17, 2024, the FTC surprised many when it published a significantly revised version as its final “Junk Fees Rule” (16 CFR Part 464). The Rule is scheduled to become effective 120 days after its publication in the Federal Register.

 

Unlike its predecessor proposals, The Final Rule is directed primarily to live event ticket sales and the short-term lodging industry (including hotels and vacation rentals). It will require the affected businesses to clearly disclose the total price of the goods or services (and all ancillary goods and services) to the consumer upfront as the first and most prominent price. This most-prominent total price requirement has been driven by the desire to avoid any “hidden fees” during the consumer’s browsing for information. Most criticized are mandatory charges and hidden fees that often appear at purchase confirmation or payment. Consumers and regulators hate service charges, resort fees and other unexpected items hidden until the end of a transaction and buried as if they are part of the taxes or government-imposed fees.

The total price to be disclosed under the Rule does not cover optional fees, government-imposed charges, or shipping fees. They remain excluded from the total price requirement. Importantly, businesses must ensure that the final payment amount, including any additional charges such as taxes or fees, is displayed as clearly and prominently as the initial advertised price. This eliminates the practice of bait-and-switch pricing, where the advertised price is significantly lower than the final price once all hidden fees are added.

The Rule also prohibits misrepresentations of the nature, character and purpose of fees. An example is a charge for something vague, like  “convenience fees.”

Note that nothing in the Rule limits the types or amounts of fees, as long as the total price is transparent and the description is not misleading.

Although the rule is focused on the lodging industry and ticket sales, the FTC will continue to enforce fair pricing practices in other sectors on a case-by-case basis, which could lead to increased state-level enforcement. The rule promises to improve transparency in hotel pricing, allowing consumers to make better-informed decisions without unexpected charges. We believe there may be an important warning to all businesses — even those outside live event ticket sales and short-term lodging — that many will miss because of the seemingly limited scope. One indication of this is the following statement in the Announcement:

“Industries beyond live-event ticketing and short-term lodging are prohibited from deceiving consumers about fees and pricing per longstanding law. The FTC will use its law enforcement authority to continue to rigorously pursue bait-and-switch pricing tactics, such as drip pricing and misleading fees, in other industries through case-by-case enforcement.”

We expect to provide some more insight on this soon.

See the FTC’s Final Junk Fees Rule Announcement and Final FTC Junk Fees Rule.

For more context on the FTC’s ruling, see our blogs on Junk Fees here:

Junk Fee Law: Exception for California restaurants moves forward

California’s AB 537 mandates transparent pricing for all short-term lodging as of July 1, 2024 — $10,000 penalty for violation

New Federal Junk Fee Law – The No Hidden FEES Act of 2023 (HR 6543)

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

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?

FTC’s proposed rule will end drip pricing and junk fees for hotels, restaurants, and many other businesses. Goodbye to resort fees, destination fees, service charges and other miscellaneous fees?

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.

Disclosing Mandatory Resort Fees – What Hoteliers Need to Know

Nebraska sues Hilton over hotel “Resort Fees”

Attorney General for DC sues Marriott International over hotel “Resort Fees”

Impending eruption of litigation over Resort Fees? What’s the fuss?

The FTC takes aim at hotel Resort Fees — The FTC 2017 Report

Picture of Jim Butler

This is Jim Butler, author of www.HotelLawBlog.com and founding partner of JMBM and JMBM’s Global Hospitality Group®. We provide business and legal advice to hotel owners, developers, independent operators, and investors. This advice covers critical hotel issues such as hotel purchase, sale, development, financing, franchise, management, ADA, and IP matters. We also have compelling experience in hotel litigation, union avoidance and union negotiations, and cybersecurity & data privacy.

JMBM’s Global Hospitality Group® has been involved in more than $125 billion of hotel transactions and more than 4,700 hotel properties located around the globe. Contact me at +1-310-201-3526 or jbutler@jmbm.com to discuss how we can help.

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Become a speaker or sponsor for Meet the Money®!

For details, please contact Laura Bailey at LBailey@jmbm.com.

 

How can we help? Brochure Credentials Photo Gallery

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JMBM’s Basic Guide to Estate Planning has been updated for 2024 and is available for immediate download here: JMBM’s 2024 Guide. The Guide addresses important estate planning issues and introduces some of the principal estate planning techniques that can provide solutions to these issues. Updates for 2024 include the following:

  • The amount that an individual can cumulatively transfer free of tax during lifetime and at death (to a recipient other than a spouse who is a U.S. citizen and/or certain charitable organizations) is $13,610,000.
  • The generation-skipping transfer (“GST”) tax exemption is also $13,610,000 per individual.
  • In addition to the exemptions described above, every individual can make gifts during life of up to $18,000 per recipient per year without paying gift tax.

If you would like to discuss how these changes affect you and your family, ways in which you might take advantage of the increased exemption amounts, or any other aspect of your estate plan, please contact us.

We suggest you review your estate plan with your attorney every three years to ensure it continues to meet your goals.

About JMBM Trusts & Estates Group
JMBM’s Trusts & Estates Group focuses on estate planning, wealth transfer planning, trust administration and the resolution of trust disputes. Our firm has one of the most active trusts and estates practices in California and our clients include individuals and families, and their business interests.

Picture of Jim Butler

This is Jim Butler, author of www.HotelLawBlog.com and founding partner of JMBM and JMBM’s Global Hospitality Group®. We provide business and legal advice to hotel owners, developers, independent operators, and investors. This advice covers critical hotel issues such as hotel purchase, sale, development, financing, franchise, management, ADA, and IP matters. We also have compelling experience in hotel litigation, union avoidance and union negotiations, and cybersecurity & data privacy.

JMBM’s Global Hospitality Group® has been involved in more than $125 billion of hotel transactions and more than 4,700 hotel properties located around the globe. Contact me at +1-310-201-3526 or jbutler@jmbm.com to discuss how we can help.

Call-for-Speakers-Sponsors-Email-Banners

Become a speaker or sponsor for Meet the Money®!

For details, please contact Laura Bailey at LBailey@jmbm.com.

 

How can we help? Brochure Credentials Photo Gallery

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31 July 2024

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Junk Fee Litigation.

NOTE: We represent the owners and operators of hotels, restaurants, and other hospitality facilities. We do not represent consumers making claims against such businesses. When it comes to Junk Fee laws at the State or National level, we help the owners and operators of hotels and restaurants understand and comply with Junk Fee Laws. When consumers make claims against them, we advise owners and operators on strategies and defense of such claims.

Restaurants, Listen Up:
Rethink How You Disclose Your Fees to Avoid Junk Fee Lawsuits

As lawyers who specialize in representing hospitality owners, developers, independent operators, and investors, we have a critical message for restaurants: it’s time to rethink how you disclose your fees. Recent changes in the legal landscape have significant implications for your operations, and compliance is no longer a matter of choice—it’s a necessity.

Immediate Statutory Requirements

Let’s dive right in. California Civil Code 1770 now mandates that all charges must be clearly and conspicuously disclosed. This isn’t a future requirement; it’s already in effect. If you’re not disclosing fees on your webpage or menu, you’re putting your business at risk. The penalties for non-compliance can be steep, including lawsuits that could cost you hundreds of thousands of dollars, even if you come out on top.

We’ve already seen several lawsuits filed under “bait-and-switch” pricing, which is prohibited in Civil Code § 1770(a)(9). The new California Junk Fee laws may have created more confusion than clarity. The litigation is just beginning under the new Civil Code § 1770(a)(29). The so-called “restaurant exemption” of SB 1524 may not be all it is cracked up to be. In fact, it may be a trap for well-meaning business people.

If you’re unsure what that means, check out the video below for a detailed explanation. CONTINUE READING →

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23 July 2024

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Junk Fee Litigation.

NOTE: We represent the owners and operators of hotels, restaurants, and other hospitality facilities. We do not represent consumers making claims against such businesses. When it comes to Junk Fee laws at the State or National level, we help the owners and operators of the hotels, restaurants and hospitality facilities to understand and comply with Junk Fee Laws. When claims are made against them by consumers of competitors, we advise on strategies and defense of such claims.

On July 1, 2024, the first comprehensive Junk Fee Law in the United States took effect in California. It prohibits drip pricing, which involves advertising a price that fails to include all mandatory charges and fees a consumer must pay. It requires upfront disclosure of the total price of goods or services upon first contact with the consumer. It applies to the sale of most goods and services, with only a few exceptions. A last-minute restaurant exemption was rushed into law — only two days before the law’s effective date.

In a recent program hosted by myLawCLE, junk fee compliance and defense lawyers Jim Butler and Mark Adams presented an update on California and federal regulations regarding junk fees. SB 478, SB 1524, and AB 537 are all in the rearview mirror and the final impact of these bills on our current law is a leading topic of discussion during the webinar. Jim and Mark also analyzed HR 6543 and S 2498, and the FTC’s proposed rule on drip pricing and misleading business practices.

In other words, this course includesthe latest information on all the changes to the most significant Junk Fee regulation in California, Congress, and the FTC.

This webinar took place on Thursday, July 18, 2024. To access an on demand recording, click here.

We have special free passes available for our clients and industry friends. If you would like more information on these passes, please contact Laura Bailey at lbailey@jmbm.com. CONTINUE READING →

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1 July 2024

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Junk Fee Litigation.

On July 1, 2024, California’s new Junk Fee Law took effect. It could have worldwide impact if prices for goods or services are publicly advertised and reach California residents. How can you avoid that with online ads and other public broadcasts over commercial media?

In anticipation of this event, many international hotel companies, cruise lines, travel providers, ticket sellers, and online sellers have already changed their advertising and promotions to comply with California law rather than risk violation. Watch for a big change to “transparent pricing” as you search online.

Take this short survey to double check your exposure

It is so much easier to prevent junk fee litigation than to defend it. Even if you “win,” it is expensive to fight government agencies. It can be worse combatting class action lawsuits by consumers with contingent fee plaintiffs’ lawyers. (Think of the 40,000+ lawsuits filed under the ADA and comparable state laws that provide for attorneys’ fees to plaintiffs)

Wakeup! It is July 1, and time to check the last-minute changes signed into law by the California Governor on June 29. Determine whether this law applies to you. Understand what it takes to comply or validly secure an exemption. Consider your answer to the following questions:

  • Do you offer hotel, restaurant, or short-term lodging facilities?
  • Do you offer consumers goods or services from California, or to California residents?
  • Are you going to rely on the restaurant exemption from the new law?

If you answered “yes” to any of these questions, consider a pro-active consultation to prevent unnecessary problems with the new California Junk Fee Law (as amended on Saturday, June 29, 2024).

Resources to help you avoid problems with California’s Junk Fee Law

The resources below provide the latest information on all the changes to the most significant Junk Fee regulation in California, Congress, and the FTC.

Free blog articles from the hospitality lawyers in JMBM’s Global Hospitality Group®. Extensive up-to-date blog articles, analysis and copies of the new laws and regulations.

Live Webinar (July 18, 2024) and On Demand recording. We have special passes for clients and friends of JMBM’s Global Hospitality Group®. Contact Laura Bailey

Event Details

Date: July 18, 2024
Location: Live Video-Broadcast
Time: 10 AM – 12:10 PM PST
Agenda and Registration: Click here

REGISTER NOW

We have special passes available for our clients and industry friends. If you would like more information on these passes, please contact Laura Bailey at lbailey@jmbm.com. CONTINUE READING →

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29 June 2024

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Junk Fee Litigation.

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.

Understanding California’s Landmark Junk Fee Law
Revisions to the Consumer Legal Remedies Act (CLRA)

Transparent pricing bans hidden fees and drip pricing
by

Jim Butler
Partner & Chair, JMBM’s Global Hospitality Group®

Mark S. Adams
Hotel Dispute Lawyer, Partner & Senior Member
JMBM’s Global Hospitality Group®

First, the nomenclature of the forbidden practices, then the names for the law, a summary of the latest events, and details of the final California Junk Fee Law. In this article, we will focus on the changes to the California Civil Code (CC), and particularly CC Section 1770) of the Consumer Legal Remedies Act (CC 1750, et eq.).

The bottom line: As of July 1, 2024, California’s new Junk Fee Law is a comprehensive transparency pricing law that eliminates hidden mandatory fees. It applies to all businesses in all industries, except for a few specific exceptions. Restaurants are exempted if they meet certain conditions. Restaurants may find compliance trickier than apparent at first glance, and even a modest consumer backlash for this special exemption may be harmful.

CA Governor signs SB 1524’s new Junk Fee Law with “Restaurant Exemption” (if certain tests are met). SB 478, SB 1524, and AB 537 all go effective July 1, 2024. Unfair business practices redefined in CC 1770.

California bans fees and practices known by many names — junk fees, hidden fees, mandatory fees, drip pricing, surcharges, resort fees, unfair and deceptive practices, bait and switch, and consumer fraud.

Names for the new 2024 California Junk Fee Law

There are so many names for the California law that is making big changes, primarily to Civil Code Section 1770. It may be helpful to list the most common names, which include:

  • Consumer Legal Remedies Act (CLRA)
  • California Junk Fee Law
  • California Honest Pricing Law
  • California Hidden Fees Statute
  • California Transparency Law
  • California SB 478
  • California SB 1524
  • California CC 1770
  • California Unfair Business Practices
  • California Unfair Competition Act
  • The price you see is the price you pay

Don’t forget AB 537 and its $10,000 civil penalties.

In addition to the amendments to California CC 1770, another Junk Fee law effective July 1, 2024, was introduced by Assemblyman Berman. He had a bad experience with a hotel “resort fee” he encountered in his private life. It led him to introduce the new law which adds a new Section 17586.6 to the California Business and Professions Code (B&P Code).

It is nicknamed the California Resort Fee Bill. It requires upfront price disclosure on first contact with consumers of all mandatory fees for all hotels, motels, and other short-term lodging rentals for less than 30 days. It carries a civil penalty of not more than $10,000 per violation. It extends to any advertisement, display, or offer of either from or into California.

It is also referred to as B&P Code Section 17586.6, and the Transparency in Short-Term Lodging Prices Act. CONTINUE READING →

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27 June 2024

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Junk Fee Litigation.

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.

On June 27, 2024, the California Senate unanimously approved SB 1524’s so-called “restaurant exception” from SB 478’s Honest Pricing Law. See, Junk Fee Law: Exception for California restaurants moves forward.

The Senate bill passed today was identical to the Assembly version passed on June 25, 2024. It was enrolled and presented to the Governor at 3:00 pm on June 27, 2024

If signed, as expected, the carve-out of restaurant surcharges from SB 478’s ban on California junk fees will become law immediately. The fast-track processing of the restaurant exemption will save the industry from the July 1, 2024, effective date for SB 478’s ban on drip pricing for most other businesses.

This exception enables restaurants, bars, and other food service businesses to continue adding mandatory fees to restaurant bills, without including them in the price of the food or beverage shown on a menu, advertisement or other display, as long as the mandatory charge is clearly and conspicuously displayed somewhere.

See Final Text of SB 1524 as passed by Senate and presented to the Governor 6-27-24.

CONTINUE READING →

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8 January 2024

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Hospitality Dispute Resolution.

Hotel Dispute Lawyer: Choice of law to govern hospitality contracts — New York, Florida, Texas, California and Maryland law

Hospitality Litigation, Arbitration & Dispute Resolution

by

Mark S. Adams, Hotel Dispute Lawyer
Partner & Senior Member
JMBM’s Global Hospitality Group®

Mark S. Adams is an experienced trial lawyer, partner, and senior member of JMBM’s Global Hospitality Group®. In his more than 14 years with the Firm, Mark has created an international reputation as a Hotel Dispute Lawyer, handling litigation, arbitration and alternate dispute resolution in hundreds of matters affecting hotels, resorts, restaurants and other hospitality properties.

Why New York law is the governing law in so many hospitality agreements

There are many reasons why parties select the laws of a specific state to govern the interpretation and enforcement of contracts in the hospitality industry. Often, they select the laws of the state where the relevant hospitality property is located, or the laws where one or both of the parties reside. However, irrespective of those considerations, New York law is often chosen as the governing law for significant financial transactions and arrangements.

There are a number of factors that make New York law one of the most popular choices for governing law. These include the following:

  1. New York is a global financial and commercial hub, which logistically makes it a preferred jurisdiction for resolving disputes through negotiations, arbitration or litigation.
  2. New York has a well-established, highly respected legal structure that provides a level of predictability and stability crucial for dealing with complex contractual relationships within the hospitality industry.
  3. New York courts have established a robust and sophisticated body of case law. This provides clarity for parties entering into hotel contracts, offering guidance on various issues, including contractual interpretation, performance obligations, and potential liability. This well-defined legal landscape reduces uncertainty and potential disputes, fostering a more secure environment for hotel owners, management companies, and franchisees.
  4. The prominence of New York law in hotel contracts is linked to the state’s role as a key center for international business transactions. Many hotel management and franchise agreements involve parties from different jurisdictions, and the familiarity and enforceability of New York law on a global scale make it a practical choice. This preference for New York law enhances the efficiency of negotiations and facilitates cooperation in the performance of the contractual obligations.

American and International jurisprudence is based largely on legal precedents, which are real life cases with well-reasoned opinions as to the outcomes.  In light of my observations given above, New York has had both a longer tenure to establish legal precedents, generally, and particularly a greater volume of decided hotel cases. These legal precedents provide indispensable guidance on the potential or likely outcomes in pending disputes, i.e. greater predictability and certainty of outcome. CONTINUE READING →

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6 January 2024

See how JMBM’s Global Hospitality Group® can help you.
Click here for the latest articles on Hospitality Dispute Resolution.

Meet Mark S. Adams, Hotel Dispute Lawyer –
Hospitality Litigation, Arbitration & Dispute Resolution

Mark S. Adams is an experienced trial lawyer, partner, and senior member of JMBM’s Global Hospitality Group®. In his more than 14 years with the Firm, Mark has created an international reputation as a Hotel Dispute Lawyer, handling litigation, arbitration, and alternate dispute resolution in hundreds of matters affecting hotels, resorts, restaurants, and other hospitality properties.

We caught up with Mark for some candid insights about him and his practice.

Q: Mark, you have had an amazing litigation career. What is the secret of your success?

A: I rarely lose, and that’s because I have a fantastic support team, unrivaled in talent. We also believe in and practice the Global Hospitality Group® mantra of “aggressive and passionate advocacy.”

Q: That is a good summary, particularly with your track record. But what is the philosophy or approach that leads to such success?

A: I customize my strategy and approach with each client in each situation. First, I need to understand my client, their goals, and other concerns. Then we initiate an iterative process where the client and I explore all relevant facts affecting the matter, what laws and contracts may govern, the aggressiveness of the parties, and various options for proceeding.  Numerous factors affect our choices, including timing for resolution, funding available to the paying party to accomplish a resolution and creative non-monetary solutions. There is no successful cookie-cutter approach.

Q: Controlling litigation costs is important for clients. If a client cannot avoid litigation, what do you do to work with the client to control the costs of pursuing or defending a claim?

A: The cost of litigation is important to all our clients, whether it is a relatively minor matter or a “bet the company” case. The cost-benefit analysis may vary depending upon the circumstances.

Here is how I advise clients to control litigation costs: CONTINUE READING →

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23 March 2023

See how JMBM’s Global Hospitality Group® can help you.

The Meet the Money program is now available on MeetTheMoney.com – take a look and see who’s speaking and what topics they’ll be exploring.

Meet the Money speakers don’t just come to the conference to share their perspectives; they also come to network with attendees. You can develop relationships, explore partnerships and ask questions one-on-one with our expert panelists and presenters, setting up opportunities that will take you through 2023 and beyond.

This year’s program will include:

  • Investment boot camps covering distressed properties and the renewed opportunity of EB-5
  • Special presentations interpreting the latest data and industry sector highlights
  • Discussion panels featuring insight into acquisitions and repositioning, creative financing, hotel transactions, alternative hospitality, lifestyle and boutique concepts and more

CONTINUE READING →

Contact Information
Jim Butler, Chairman
Global Hospitality Group®
Jeffer Mangels Butler & Mitchell LLP
(310) 201-3526 • jbutler@jmbm.com
www.HotelLawyer.com

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