California Governor Gavin Newsom has taken a decisive step to protect consumers from hidden charges with the signing of a new bill that outlaws junk fees. Californians will no longer be blindsided by undisclosed costs for tickets and room bookings, thanks to this landmark legislation.
The bill, known as SB 478 and proposed by California State Senator Bill Dodds, addresses the problem of hidden fees that are not displayed upfront in advertising. It declares these fees a deceptive business practice and aims to bring transparency and fairness to consumer transactions. The new regulations will take effect on July 1, 2024.
State Senator Nancy Skinner, one of the co-authors of the bill, expressed her satisfaction with Governor Newsom’s signing of SB 478, stating that it will enable Californians to know exactly how much they are being charged upfront. She emphasized that consumers will no longer be surprised by hidden junk fees when purchasing concert or sports tickets or booking hotel rooms for their family vacations.
The prevalence of junk fees in the United States is alarming. According to a survey by nonprofit watchdog Consumer Reports in 2019, 85% of Americans have been charged hidden fees. The Consumer Financial Protection Bureau reported in 2022 that Americans spend a staggering $29 billion each year on these undisclosed charges.
Junk fees take advantage of consumers’ psychological biases, as highlighted by Vicki Morwitz, a professor at Columbia Business School. Morwitz explained that consumers often hesitate to explore cheaper alternatives, ultimately following through with a purchase even when it turns out to be more expensive than expected.
The fight against junk fees has also gained attention at the federal level. President Joe Biden has made combating these fees a priority for his administration since 2022. In July, he announced measures to crack down on junk fees in the rental housing market, stressing that people are tired of being taken advantage of.
With the new law in place, Californians can expect greater transparency and protection in their consumer transactions. Hidden charges will no longer catch them off guard, allowing them to make more informed decisions and avoid unnecessary expenses. This bold move by Governor Newsom sets a precedent for other states to tackle the issue of junk fees and prioritize consumer rights.