Junk Fees

SB 478, set to take effect on July 1, 2024, is a significant piece of legislation in California aimed at enhancing consumer transparency by prohibiting businesses from advertising prices that are lower than the actual amount consumers will ultimately pay. This law, which amends the California Consumer Legal Remedies Act (CLRA), targets practices like drip pricing and junk fees, which have long been criticized for misleading consumers.

Drip pricing, as defined by SB 478, occurs when businesses advertise a low initial price to attract customers but then add on additional mandatory fees later in the purchasing process. These fees may not be prominently disclosed upfront, leading consumers to believe they are paying less than they actually will.

By outlawing drip pricing and similar practices, SB 478 aims to ensure that consumers have a clearer understanding of the total cost of goods and services from the outset of their transactions. This increased transparency benefits consumers by allowing them to make more informed purchasing decisions.

Moreover, SB 478 imposes significant penalties for businesses found in violation of the law, including a $1,000 per violation penalty, restitution, and payment of attorney’s fees. These remedies create strong incentives for consumers to bring claims against businesses engaging in prohibited pricing practices.

The broad scope of SB 478 means that it applies to virtually all businesses operating in California, regardless of size or industry. Any person or entity engaging in transactions intended to result in the sale of goods or services to consumers within the state will be subject to the provisions of the law.

Overall, SB 478 represents a proactive effort by California lawmakers to protect consumers from deceptive pricing practices and promote fair and transparent business practices statewide.