We’ve all been there. You see a price online, get to the checkout, and find out there are extra fees. These so-called “junk fees” have angered consumers for years. California has taken action by enacting a broad new law to combat the problem. Senate Bill 478, now the California Junk Fee Law, effectively changed how businesses must display their prices. The law took effect on July 1, 2024. As of 2025, its impact is being felt across the state.
This “fair pricing” law is intended to eliminate deceptive “drip pricing.” This is where a business posts an low price upfront, then adds on mandatory fees later. For businesses, it is essential to be aware of and abide by this law. This is so they can avoid hefty legal penalties. This article covers what the California Junk Fee Law requires. We will also review who is affected and how businesses can comply.
What Is the California Junk Fee Law (SB 478)?
Essentially, the California Junk Fee Law is an issue of transparency. It added a new section to the state’s Civil Code. The section makes it unlawful for a business to promote a price for a good or service if the price excludes mandatory fees or charges.
The Core Rule: All-In Pricing
The main requirement of SB 478 is simple: “all-in” pricing. This means the first price a customer sees must be the total price they pay. A business must include all the charges required in this single, upfront price. In short, what you see should be what you get (before government-mandated taxes). According to the text of SB 478 on the California Legislative Information website, this rule aims to stop companies from advertising a price that is less than what the consumer will actually pay.
What Counts as a Banned “Junk Fee”?
Under this law, a “junk fee” is any mandatory fee a company doesn’t include in the initial advertised price. Those are the fees that cause the final price to “drip” more at checkout. A few common examples that are now illegal to add on separately at the end are:
- Mandatory “Service Fees” at restaurants or for event tickets.
- Hotel “Resort Fees” or required “destination fees.”
- “Convenience Fees” for online ticket purchases.
- Required “Handling” or “Processing” fees for online orders.
- Mandatory “Cleaning Fees” for short-term rentals that a business does not include in the nightly rate.
The keyword is mandatory. If a customer cannot buy the product without paying a fee, the business must include it in the advertised price from the start.
Industries Impacted by the California Junk Fee Law
Though the law is far-reaching, there are industries that were impacted more greatly. This is because of their usual pricing schemes. Some of these industries include:
- Restaurants and Bars: Many places previously added a mandatory “service charge” or “equity fee” to the final bill. Now, they must build that charge into their menu prices.
- Hotels and Lodging: The practice of advertising a low nightly rate and then adding a mandatory daily “resort fee” is no longer allowed. The hotel must advertise the full rate, including such fees.
- Ticket Sellers: Companies like Ticketmaster and Live Nation can no longer show a low ticket price and then add substantial “service” fees at the end.
- Food Delivery Apps: Platforms like DoorDash and Uber Eats had to adjust how they display service fees to comply. They must show the fees as part of the price upfront.
- Online Retailers: Any e-commerce site adding a required “handling” fee at checkout must now include it in the initial product price.
What Fees Are Still Allowed To Be Added Separately?
The California Junk Fee Law does not ban all extra charges. It bans only mandatory charges apart from the advertised cost. The following can generally still be tacked on extra at the end:
- Government-Imposed Taxes/Fees: Standard sales tax and local government taxes (like tourism assessments) do not need to be in the advertised price.
- Optional Charges and Upgrades: Fees for services or features a consumer actively chooses are fine. For example, a customer choosing express shipping, adding extra toppings, or upgrading a seat can be charged for it separately.
- Reasonable Shipping Costs: Businesses can add standard charges for postage or freight to deliver a physical good.
- Tips/Gratuities: Voluntary tips left by a customer are not affected because they are not mandatory.
The crucial difference is whether the fee is required or optional. If it’s required, it must be in the upfront price.
Penalties for Violating the California Junk Fee Law
Businesses that don’t comply with SB 478 face significant legal risk. The law makes a violation an unfair competition and false advertising act. These are addressed by California’s Unfair Competition Law (UCL) and False Advertising Law (FAL).
According to the California Attorney General’s Office, several parties can enforce the law. This includes the Attorney General, local district attorneys, and private citizens through lawsuits. Penalties can include:
- Civil Penalties: Fines of up to $2,500 per violation.
- Restitution: Court orders requiring the business to pay back consumers who were charged illegal fees.
- Private Lawsuits: Consumers can sue individually or as part of a class action. These lawsuits can lead to substantial damage awards and legal fees.
Complying with the California Junk Fee Law: Next Steps
The most effective strategy for California business owners is proactive compliance. Key steps include the following:
- Audit All Pricing: First, carefully review every price you advertise. This includes prices on menus, websites, apps, or shelf tags.
- Incorporate Fees: Next, combine all mandatory fees into the initial displayed price. Your new advertised price should be this “all-in” number.
- Train Your Staff: Also, ensure all employees understand the all-in pricing rule. They need to explain it clearly to customers who might ask about the new price structure.
- Update Your Systems: Finally, adjust your point-of-sale (POS) systems and online checkouts. They must reflect the single, total price before government taxes.
- Distinguish Mandatory vs. Optional: Clearly separate any optional upgrades or services from the base price. Don’t add them automatically to a customer’s cart.
How KAASS LAW Helps Businesses Adapt
New consumer protection legislation, like the California Junk Fee Law, can be tricky to navigate. Failure to understand the law can lead to costly consumer complaints and government action.
At KAASS LAW, our attorneys provide counsel on regulatory compliance. This is a key component of our Business Law practice. We help California businesses audit their price schedules and advertisements. This is to help them comply with SB 478 standards. Our attorneys can help with rewriting service agreements, auditing marketing materials, and implementing compliant pricing policies. We help you minimize legal exposure while being open in your business practices. If your business needs help in complying with these new laws, please Contact Us.
Conclusion
The California Junk Fee Law is a significant step in the direction of price transparency. SB 478 requires businesses to advertise an all-in price. This price is required to include all mandatory charges. The bill aims to eliminate consumer frustration of “drip pricing.” For businesses, this will mean adopting a new advertising and pricing standard. Proactive compliance is the best way of avoiding penalties and achieving consumer trust. In California’s market in 2025, what you see truly must be what you get.