California is set to outlaw hidden charges on purchases after Gov. Gavin Newsom signed legislation that would ban so-called "junk fees" in the country's largest state.
Newsom has signed Senate Bill 478, proposed by Sen. Bill Dodd, D-Napa, in partnership with Attorney General Rob Bonta and Sen. Nancy Skinner, D-Berkeley, which seeks to outlaw hidden charges on purchases — also known as junk fees — ensuring consumers are not exposed to deceptive business practices that add unfair costs, Dodd's office said in a news release Saturday.
"Now we can put the consumer first and create a level playing field for those businesses that advertise the real price, up front," Sen. Dodd said in a statement. "I appreciate everyone who worked to end these dishonest charges that boost corporate profits at the expense of those who can least afford it."
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In his State of the Union address in February, President Joe Biden called out junk fees applied to an array of transactions involving banks, ticket vendors, airlines and online sellers. According to one estimate cited by Dodd's office, some 85 percent of Americans have paid hidden fees totaling $28 billion per year.
California, which has the fifth largest economy in the world and the nation's largest population, pays an outsized share of those hidden fees, Dodd's office said.
The president proposed federal action by numerous federal agencies to address issues within their subject matter and regulatory authority. At the state level, Sens. Dodd and Skinner, along with Attorney General Bonta, introduced SB 478, which would expand on the White House proposal by expressly prohibiting the practice of advertising a certain price and then adding on mandatory charges that are controlled by the business.
Companies, regardless of industry sector, that fail to comply with the new rules could be subject to steep financial penalties, Dodd's office said.
SB 478 received broad support from consumer groups and legislators before being signed by the governor, the office added.
"(Junk fees) hit families who are just trying to make ends meet the hardest. And, because a growing list of websites, apps, and brick-and-mortar businesses are using them, they penalize companies that are upfront and transparent with their prices," Attorney General Rob Bonta said in a statement.
"With the signing of SB 478, California now has the most effective piece of legislation in the nation to tackle this problem. The price Californians see will be the price they pay," Bonta added.
"California sent a clear message today: The days of bait-and-switch pricing practices are over," said Sen. Skinner in a statement. "With Gov. Newsom's signing of SB 478, Californians will know up front how much they're being asked to pay, and no longer be surprised by hidden junk fees when buying a concert or sports ticket or booking hotel rooms for their family vacation."
