California’s S.B. 478: Complying with the New Honest Pricing Law

According to an article by the law firm Benesch, California’s “Junk Fee Ban” (S.B. 478), also known as the “Honest Pricing Law” or “Hidden Fees Statute,” will take effect on July 1, 2024. 

This law amends the Consumers Legal Remedies Act (CLRA) by prohibiting businesses from advertising prices that exclude mandatory fees or charges, with exceptions for government taxes and shipping costs. The law aims to enhance price transparency, ensuring consumers see the final price upfront.

The California Attorney General’s Office released a set of FAQs on May 8, 2024, to guide businesses on compliance. Key points from the FAQs include:

• Applicability: S.B. 478 applies to most businesses selling or leasing goods and services for personal use, including online and brick-and-mortar retailers, hotels, restaurants, cruise operators and event ticket resellers.
• Price Disclosure: Prices must include all mandatory fees in the advertised amount. It is insufficient to add fees later or indicate that the listed price does not include certain fees. Businesses can still explain fee breakdowns and mention discounts without listing a specific price.
• Fee Regulations: The law does not control the amount charged but ensures all fees are included in the listed price. Handling fees must be included, but postage for shipping physical goods can be excluded. Optional fees or those based on later consumer actions (like late fees or smoking charges) do not need to be included in the initial price.
• Advertising Practices: Businesses should know and disclose the total price before advertising. Variable service fees added later in the transaction are prohibited. Discounts can still be offered as long as the final price is not higher than the advertised price.

Businesses must review and adjust their advertising practices to comply with S.B. 478, utilizing the Attorney General’s guidance to avoid penalties and ensure transparency.