What is the new law for surcharge in California?

California’s Transparency Revolution: SB 478 Takes Aim at Hidden Fees

For years, Californians have faced the frustrating surprise of “junk fees” – mandatory surcharges tacked onto the final bill that were often hidden or vaguely described. Whether it was a mysterious “service fee” at a restaurant or an unexpected “processing fee” on an online purchase, these hidden costs added up and eroded consumer trust. Now, thanks to California Senate Bill 478 (SB 478), that’s about to change.

Taking effect in 2024, SB 478 is a landmark piece of legislation designed to bring pricing transparency to the forefront. The core principle is simple: what you see is what you pay. Businesses operating in California, including restaurants, hotels, event venues, and online retailers, are now legally obligated to include all mandatory surcharges and extra costs directly in their advertised prices.

This means an end to the days of seeing a tempting menu price, only to be blindsided by a “kitchen appreciation fee” or a “living wage surcharge” at the end of the meal. Under SB 478, the price listed on the menu or displayed online must be the true, final price consumers can expect to pay, excluding only government-imposed taxes and delivery fees when applicable.

What Does SB 478 Mean for Consumers?

The benefits for consumers are significant:

• Greater Transparency: No more hidden fees lurking in the fine print. You’ll know the full cost upfront.
• Informed Decision-Making: With transparent pricing, you can more accurately compare prices between businesses and make choices that align with your budget.
• Reduced Frustration: Say goodbye to the unpleasant surprise of unexpected charges on your bill.
• Increased Competition: By forcing businesses to be upfront about their pricing, SB 478 fosters a more competitive market, incentivizing companies to offer better value.

Who is Affected by SB 478?

This new law impacts virtually every business operating in California that charges mandatory fees beyond the advertised price. This includes, but is not limited to:

• Restaurants: Surcharges for employee benefits, kitchen appreciation, or facility maintenance must now be integrated into menu prices.
• Hotels: Resort fees and other mandatory charges must be clearly disclosed and included in the advertised room rate.
• Event Venues: Fees for concerts, sporting events, and other gatherings must be included in the ticket price.
• Online Retailers: Processing fees and other mandatory charges must be incorporated into the displayed price of goods and services.

What are the Exceptions?

The main exceptions to SB 478 involve government-imposed taxes. Businesses are still permitted to list taxes separately, as they are mandated by law and can vary. Delivery fees are also generally excluded from the advertised price, provided they are clearly disclosed to the consumer before finalizing the purchase.

A Step Towards Fairer Pricing

SB 478 represents a significant step towards fairer and more transparent pricing practices in California. By eliminating hidden fees and promoting upfront cost disclosure, this new law empowers consumers to make informed decisions and fosters a more competitive marketplace. While it might take some time for all businesses to fully comply, the long-term benefits for California consumers are undeniable. It signals a clear message: transparency is paramount, and hidden fees are no longer acceptable.