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SB 478 - Hidden Fees | State of California - Department of Justice - Office of the Attorney General
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SB 478 is a price transparency bill. The statute does not" /> <meta name="generator" content="Drupal 7 (http://drupal.org)" /> <link rel="canonical" href="https://oag.ca.gov/hiddenfees" /> <link rel="shortlink" href="https://oag.ca.gov/node/585017" /> <meta property="og:site_name" content="State of California - Department of Justice - Office of the Attorney General" /> <meta property="og:type" content="article" /> <meta property="og:url" content="https://oag.ca.gov/hiddenfees" /> <meta property="og:title" content="SB 478 - Hidden Fees" /> <meta property="og:description" content="Beginning July 1, 2024, the “Honest Pricing Law” or “Hidden Fees Statute,” SB 478, which was recently amended by SB 1524, makes it illegal for most businesses to advertise or list a price for a good or service that does not include all required fees or charges other than certain government taxes and shipping costs. SB 478 is a price transparency bill. The statute does not change what price a business can charge or what may be included in that price. The law simply requires that the price listed include all mandatory charges." /> <meta property="og:updated_time" content="2024-07-23T13:35:03-07:00" /> <meta property="og:image" content="https://oag.ca.gov/sites/default/files/oag-opengraph.jpg" /> <meta name="twitter:card" content="summary_large_image" /> <meta name="twitter:url" content="https://oag.ca.gov/hiddenfees" /> <meta name="twitter:title" content="SB 478 - Hidden Fees" /> <meta name="twitter:description" content="Beginning July 1, 2024, the “Honest Pricing Law” or “Hidden Fees Statute,” SB 478, which was recently amended by SB 1524, makes it illegal for most businesses to advertise or list a price for a good" /> <meta name="twitter:image" content="https://oag.ca.gov/sites/default/files/oag-opengraph.jpg" /> <meta property="article:published_time" content="2024-05-08T12:55:57-07:00" /> <meta property="article:modified_time" content="2024-07-23T13:35:03-07:00" /> <link rel="apple-touch-icon" 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}); </script> </div> </div> </div> <!-- </div> --> <!-- </div> </nav> --> <div class="container-fluid"> <div class="row"> </div> </div> <div class="main-container container"> <div class="row"> <section class="col-sm-12"> <a id="main-content"></a> <h1 class="page-header">SB 478 - Hidden Fees</h1> <div class="region region-content"> <div id="block-system-main" class="block block-system"> <div class="content"> <div id="node-585017" class="node node-page clearfix" about="/hiddenfees" typeof="foaf:Document"> <span property="dc:title" content="SB 478 - Hidden Fees" class="rdf-meta element-hidden"></span><span property="sioc:num_replies" content="0" datatype="xsd:integer" class="rdf-meta element-hidden"></span> <div class="content clearfix"> <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p>Beginning July 1, 2024, the “Honest Pricing Law” or “Hidden Fees Statute,” SB 478, which was recently amended by SB 1524, makes it illegal for most businesses to advertise or list a price for a good or service that does not include all required fees or charges other than certain government taxes and shipping costs. SB 478 is a price transparency bill. The statute does not change what price a business can charge or what may be included in that price. The law simply requires that the price listed include all mandatory charges.</p> <p>Put simply, the price a Californian sees should be the price they pay.</p> <p>Mandatory fees charged by restaurants, bars, and other select food vendors are exempted from SB 478’s requirements so long as the fee is clearly and conspicuously displayed wherever prices are shown (see SB <a href="https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB1524" target="_blank" rel="noopener noreferrer">1524</a>). </p> <p>In order to help businesses comply with this new law, and to offer consumers guidance about what they can expect, the Attorney General’s Office is releasing a set of FAQs. The law is found at Section 1770(a)(29) of the California Civil Code.</p> <div class="panel-group" id="accordion" role="tablist" aria-multiselectable="true"> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading1"> <h4 class="panel-title"> <a role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse1" aria-expanded="true" aria-controls="collapse1"> What is the purpose of the law? </a> </h4> </div> <div id="collapse1" class="panel-collapse collapse in" role="tabpanel" aria-labelledby="heading1"> <div class="panel-body"> <p>The law is “intended to specifically prohibit drip pricing, which involves advertising a price that is less than the actual price that a consumer will have to pay for a good or service.” Advertising or listing a price that is less than what a consumer will eventually be charged is a form of deceptive advertising that also violates existing state and federal law. Truthful price advertising helps businesses compete fairly on price and allows consumers to make accurate price comparisons.</p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading5"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse5" aria-expanded="false" aria-controls="collapse5"> Which businesses need to follow this law? </a> </h4> </div> <div id="collapse5" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading5"> <div class="panel-body"> <p>The law applies to the sale or lease of most goods and services that are for a consumer’s personal use. For example, it applies to event tickets, short-term rentals, hotels, and food delivery platforms, just to name a few prominent industries. The law does not apply to the purchase or lease of goods or services for commercial use, or to certain other specified transactions and industries that are already subject to other laws governing pricing.</p> <p>Most of these rules do not apply to the sale of individual food or beverage items to a customer by a restaurant, bar, food concession, or grocery store, by a grocery delivery service that is owned by or under contract with a grocery store or food distributor, or pursuant to a banquet or catering services contract or menu.</p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading2"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse2" aria-expanded="false" aria-controls="collapse2"> What does the new law require? </a> </h4> </div> <div id="collapse2" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading2"> <div class="panel-body"> <p>The law requires honest pricing. It prohibits businesses from “[a]dvertising, displaying, or offering a price for a good or service that does not include all mandatory fees or charges” other than government-imposed taxes or fees or reasonable shipping costs. The text of the law can be found at section 1770(a)(29) of the California Civil Code.</p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading4"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse4" aria-expanded="false" aria-controls="collapse4"> What can a business exclude from the advertised price under this law? </a> </h4> </div> <div id="collapse4" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading4"> <div class="panel-body"> <p>The listed or advertised price does not need to include taxes and/or fees that the government imposes on the transaction, such as sales tax. In addition, the listed or advertised price does not need to include reasonable shipping costs for physical goods.</p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading6"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse6" aria-expanded="false" aria-controls="collapse6"> Does the law limit how much a business can charge for a good or service? </a> </h4> </div> <div id="collapse6" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading6"> <div class="panel-body"> <p>No. SB 478 is a transparency law – not a price control law. A business is generally free to charge whatever amount it wants for a good or service, to provide a subsequent breakdown of the various fees or charges that are included in its listed or advertised price, and to tell the consumer about those fees and charges. But the posted price must include all amounts that the consumer will be required to pay.</p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading7"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse7" aria-expanded="false" aria-controls="collapse7"> Does the new law limit what types of fees a business can charge? </a> </h4> </div> <div id="collapse7" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading7"> <div class="panel-body"> <p>No. A business is generally free to charge however much it wants and can then provide a breakdown of the various fees that are included in its listed or advertised price. But the posted price must include the full amount that a consumer must pay for that good or service.</p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading8"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse8" aria-expanded="false" aria-controls="collapse8"> Can a business exclude shipping and handling charges from its advertised price? </a> </h4> </div> <div id="collapse8" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading8"> <div class="panel-body"> <p>A business can exclude shipping charges, but not handling charges. In the words of the statute, a business can exclude from its advertised price “[p]ostage or carriage charges that will be reasonably and actually incurred to ship the physical good to the consumer.” Like any other mandatory fee or charge, a handling charge must be included in the advertised price.</p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading9"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse9" aria-expanded="false" aria-controls="collapse9"> Do fees for optional services or features need to be included in the advertised price? </a> </h4> </div> <div id="collapse9" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading9"> <div class="panel-body"> <p>No. Fees for optional services or features do not need to be included in the advertised price.</p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading10"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse10" aria-expanded="false" aria-controls="collapse10"> What about separate fees like late fees for equipment rentals, charges for smoking in a hotel room, or similar charges? Are those prohibited? </a> </h4> </div> <div id="collapse10" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading10"> <div class="panel-body"> <p>The law requires mandatory fees to be included in advertised prices. Fees that are contingent on certain later conduct by a consumer, such as a fee for returning rented equipment after the deadline to do so, or charges for smoking in a non-smoking hotel room, are not mandatory and do not need to be included in the advertised price.</p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading26a"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse26a" aria-expanded="false" aria-controls="collapse26a"> Can a business comply with this law by disclosing additional required fees before a consumer finalizes a transaction? </a> </h4> </div> <div id="collapse26a" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading26a"> <div class="panel-body"> <p>No. The advertised or listed price must be the full price that the consumer is required to pay.</p> <p>Mandatory fees charged by restaurants, bars, and other select food vendors are exempted from SB 478’s requirements so long as the fee is clearly and conspicuously displayed wherever prices are shown (see SB <a href="https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB1524" target="_blank" rel="noopener noreferrer">1524</a>).</p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading27"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse27" aria-expanded="false" aria-controls="collapse27"> Can a business comply with this law by advertising a price that is less than what a consumer will actually have to pay, but disclosing that additional fees will be added? </a> </h4> </div> <div id="collapse27" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading27"> <div class="panel-body"> <p>No. The price advertised to the consumer must be the full price that the consumer is required to pay.</p> <p>Mandatory fees charged by restaurants, bars, and other select food vendors are exempted from SB 478’s requirements so long as the fee is clearly and conspicuously displayed wherever prices are shown (see SB <a href="https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB1524" target="_blank" rel="noopener noreferrer">1524</a>). </p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading28"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse28" aria-expanded="false" aria-controls="collapse28"> Can a business comply with this law by listing or advertising one price and separately stating that an additional percentage fee will apply? </a> </h4> </div> <div id="collapse28" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading28"> <div class="panel-body"> <p>No. The price listed or advertised to the consumer must be the full price that the consumer is required to pay. </p> <p>Mandatory fees charged by restaurants, bars, and other select food vendors are exempted from SB 478’s requirements so long as the fee is clearly and conspicuously displayed wherever prices are shown (see SB <a href="https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB1524" target="_blank" rel="noopener noreferrer">1524</a>). </p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading29"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse29" aria-expanded="false" aria-controls="collapse29"> Does a business need to include credit card processing fees in the advertised price? </a> </h4> </div> <div id="collapse29" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading29"> <div class="panel-body"> <p>Generally, no, because a credit card processing fee is not a mandatory fee if the customer can avoid the fee by paying a different way (e.g. cash.) However, if a business only accepts credit cards as a form of payment, then the credit card fee is mandatory and would have to be included in the advertised price.</p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading14"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse14" aria-expanded="false" aria-controls="collapse14"> Can a business comply with this law by advertising the total price for a good or service and separately noting that the total price includes certain fees and charges? </a> </h4> </div> <div id="collapse14" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading14"> <div class="panel-body"> <p>Yes. The price advertised to the consumer must be the full price that the consumer is required to pay. But the law does not limit a merchant’s ability to include fees or charges in that total price, or to tell consumers that its prices include those fees or charges.</p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading15"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse15" aria-expanded="false" aria-controls="collapse15"> Does this law prohibit a business from advertising one price and adding a variable service fee later in the transaction? </a> </h4> </div> <div id="collapse15" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading15"> <div class="panel-body"> <p>Yes. The price listed or advertised to the consumer must be the full price that the consumer is required to pay.</p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading16"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse16" aria-expanded="false" aria-controls="collapse16"> What if a business doesn’t know how much it will charge a customer? </a> </h4> </div> <div id="collapse16" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading16"> <div class="panel-body"> <p>If a business chooses to list a price for a good or service, the advertised price must be the entire amount the consumer will have to pay, not including any fees for optional services or features, taxes, or shipping charges. Businesses that do not know how much they will charge a customer at the beginning of a transaction should wait to display a price until they know how much they will charge. Businesses should be aware that other state and federal laws prohibit certain forms of price discrimination.</p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading30"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse30" aria-expanded="false" aria-controls="collapse30"> How can a food-delivery platform advertise its delivery price? </a> </h4> </div> <div id="collapse30" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading30"> <div class="panel-body"> <p>Food delivery platforms are subject to special requirements under Business and Professions Code section 22598 et seq. when they list the prices charged by a restaurant from which they deliver food, and this law does not change those requirements. But when the food delivery platform advertises the price of the delivery service that it provides, it must advertise the full, all-in price of the delivery service.</p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading31"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse31" aria-expanded="false" aria-controls="collapse31"> Can a business exclude from the advertised or listed price mandatory charges that will be used to pay business costs, such as security, rent, or salary, healthcare insurance or benefits to employees? </a> </h4> </div> <div id="collapse31" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading31"> <div class="panel-body"> <p>No. The listed or advertised price for goods or services covered by the law must include all mandatory charges except for reasonable shipping costs for physical goods and taxes and/or fees that the government imposes on the transaction, such as sales tax. A business is free to provide a subsequent breakdown of the business’s intended use of the various fees.</p> <p>Mandatory fees charged by restaurants, bars, and other select food vendors are exempted from SB 478’s requirements so long as the fee is clearly and conspicuously displayed wherever prices are shown (see SB <a href="https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB1524" target="_blank" rel="noopener noreferrer">1524</a>). </p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading20"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse20" aria-expanded="false" aria-controls="collapse20"> What about tips or gratuities left voluntarily by customers? </a> </h4> </div> <div id="collapse20" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading20"> <div class="panel-body"> <p> This law does not affect tips or gratuities left by customers, since they are not mandatory. These voluntary payments to workers are governed by other laws, including Labor Code section 350. For more information see this <a href="https://www.dir.ca.gov/dlse/faq_tipsandgratuities.htm#:~:text=Are the tips I receive,of pay when calculating overtime." target="_blank" rel="noopener noreferrer">FAQ</a> from the California Labor Commissioner.</p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading23"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse23" aria-expanded="false" aria-controls="collapse23"> Does a business that offers discounts or coupons, or charges a customer less than the advertised or listed price, violate this law? </a> </h4> </div> <div id="collapse23" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading23"> <div class="panel-body"> <p>No. A business that offers discounts or otherwise charges a customer a price that is less than the advertised price has not violated this law. The law just prohibits advertising a price that is less than what the customer will have to pay for a good or service.</p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading24"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse24" aria-expanded="false" aria-controls="collapse24"> Can businesses still advertise discounts – for example, “half price after 4pm”? </a> </h4> </div> <div id="collapse24" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading24"> <div class="panel-body"> <p>Yes. SB 478 prohibits advertising a price that is less than what a consumer will have to pay for a good or service. Advertisements that mention discounts – but that do not list a price – do not violate the law. However, other California laws prohibit advertising that is false or misleading, so businesses that advertise discounts must do so carefully and honestly.</p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading25"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse25" aria-expanded="false" aria-controls="collapse25"> Is the resale of goods, such as event tickets, on an online platform subject to the law? </a> </h4> </div> <div id="collapse25" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading25"> <div class="panel-body"> <p>Yes. SB 478 prohibits advertising a price that is less than what a consumer will have to pay for a good or service. It applies equally to online and brick-and-mortar businesses, as well as to the resale of event tickets and other goods and services.</p> </div> </div> </div> <div class="panel panel-default"> <div class="panel-heading" role="tab" id="heading26"> <h4 class="panel-title"> <a class="collapsed" role="button" data-toggle="collapse" data-parent="#accordion" href="#collapse26" aria-expanded="false" aria-controls="collapse26"> Isn’t it helpful for a business to inform consumers about the components of a price, such as by noting why price increases have been implemented? </a> </h4> </div> <div id="collapse26" class="panel-collapse collapse" role="tabpanel" aria-labelledby="heading26"> <div class="panel-body"> <p>Businesses are free to explain how they set their prices or to subsequently itemize the charges that make up the total price that they charge customers. However, the price they advertise or display must be the total price that customers will have to pay for the good or service. Knowing the price of a good or service is essential to competition, and displaying a price that is less than what the customer will actually be charged is deceptive.</p> </div> </div> </div> </div> <h2>Relevant Press Releases</h2> <ul> <li>In May 2023, Attorney General Bonta issued a <a href="https://oag.ca.gov/news/press-releases/attorney-general-bonta-calls-california-legislature-ban-hidden-fees-aka-junk">press release</a> and held a <a href="https://www.youtube.com/watch?v=CB3vvw2sbF0" target="_blank" rel="noopener noreferrer">press conference</a> to highlight the importance of SB 478.</li> <li>In October 2023, Attorney General Bonta <a href="https://oag.ca.gov/news/press-releases/attorney-general-bonta’s-sponsored-bill-ban-hidden-fees-california-signed-law">issued a statement</a> in response to SB 478 being signed into law by Governor Gavin Newsom.</li> </ul></div></div></div> </div> </div> </div> </div> </div> <!-- /#left column content --> <!-- /#middle column content --> <!-- 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