Starting July 1, a new law will forbid California restaurants from incorporating service fees into bills.
Aimed at eliminating the practice adopted by numerous eateries to bolster wages in place of conventional tipping, the law marks a significant change in the state’s dining landscape.
Attorney General Rob Bonta, along with the California Low-Income Consumer Coalition, co-sponsored SB 478, which was authored by Senators Bill Dodd and Nancy Skinner.
“These deceptive fees prevent us from knowing how much we will be charged at the outset. They are bad for consumers and bad for competition,” Mr. Bonta said in a news release last October after Mr. Newsom signed the bill into law.
The law extends beyond dining establishments, targeting additional hidden charges associated with various transactions, including online purchases like concert tickets and hotel bookings.
“They cost Americans tens of billions of dollars each year. They hit families who are just trying to make ends meet the hardest,” Mr. Bonta said. “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.”
Typically, such fees are either disclosed in fine print or revealed later in the purchasing process, often as unavoidable additional expenses.
“With the governor’s signing of this historic bill, we can finally take aim at dishonest junk fees that are tacked onto seemingly everything – from online concert tickets to hotel reservations,” Sen. Dodd said in Mr. Bonta’s press release. “It’s an underhanded trick to boost corporate profits at the expense of those who can least afford it. Our bill will end these unfair practices and put the consumer first, leveling the playing field for reputable businesses that advertise the real price up front.”
Amid mounting worries about pricing transparency, the law aims to guarantee consumers comprehend all costs upfront.
“California sent a clear message: The days of bait-and-switch pricing practices are over,” Sen. Skinner said in the same news release.
Non-compliant businesses risk lawsuits with damages starting at $1,000 per each violation.
Food delivery platforms like DoorDash and Instacart are exempt from the new law.
Affected fees include service charges, those for credit card processing, and in San Francisco, specifically, a 5 percent surcharge for city-mandated health coverage for employees.
