California is cracking down on its “junk fees.”
According to the Consumer Financial Protection Bureau (CFPB), junk fees, found in various forms like service charges for food deliveries, overdraft fees in banking, and extra sports ticket costs, collectively cost Americans over $29 billion annually.
These fees have a common characteristic: they significantly surpass the cost of the service they claim to cover.
Unfortunately, the new law won’t go into effect until July 1, 2024.
California’s new law outlaws drip pricing, the tactic of advertising only part of a product’s actual cost. It doesn’t restrict pricing but controls how prices can be promoted or shown.
“Now we can put the consumer first and create a level playing field for those businesses that advertise the real price, upfront,” said California state Senator Bill Dodd. Adding that the fees are now tacked onto “seemingly everything.”
Senators Dodd and Nancy Skinner introduced the bill to prohibit junk fees in February, and it successfully passed through the California Senate in May and the State Assembly in September.
Lawmakers are now paying more attention to junk fees because they impact a broader range of everyday purchases, catching consumers off guard and increasing costs.
“We deserve complete and transparent pricing information to help inform our purchases,” said Jenn Engstrom, state director for the U.S. Public Interest Research Group’s California arm. “Without knowing the true price of a product or service upfront, the process of comparison shopping becomes nearly impossible.”
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