In response to growing concerns about hidden fees and inflated costs, California has announced a new mandate set to come into effect on July 1st. Thousands of restaurants and businesses will no longer be allowed to add on service charges, resort fees, surcharges, or “junk fees” without clearly indicating these costs in their menu prices. This means that any fees previously added separately, such as delivery charges or tips, must be incorporated into the price of goods and services. Only fees that are optional, such as tips, can remain as separate line items.
California Attorney General Rob Bonta described the new legislation as straightforward, stating that “the price you see is the price you pay”. Violations of this rule could result in compensation claims worth $1,000 or more. Consumer groups, including the California Public Interest Research Group, support the move, arguing that it will allow for fairer competition and better price comparisons. However, some business leaders are less enthusiastic, warning that menu price increases resulting from the legislation could lead to reduced customer numbers and fewer hours for staff.
The legislation follows a similar trend across dozens of other US states, all of which are implementing measures designed to promote greater transparency around fees and charges. Restaurants in Washington DC are currently facing legal action over allegedly deceptive pricing practices. While the impact of the new legislation remains uncertain, experts predict that it could prove to be a mixed blessing for both consumers and businesses in California, given the ongoing challenges posed by inflation. Consumer Federation of America Director of Consumer Protection Erin Witte commented that, “Feeling like you had fees added on to already increasing prices across the economy sort of felt like a double punch for consumers.” Many consumers find themselves frustrated by the lack of clarity over where additional charges are going, leading to confusion over whether or not they should continue to tip staff members when fees are already included as part of their bill. Nonetheless, proponents of the legislation suggest that it will empower consumers by promoting greater transparency around pricing, thus enabling them to make more informed decisions about where to spend their money. State Senator Bill Dodd, who sponsored the legislation, asserted that the new rules would give “consumers first” and ensure that businesses operating within California are treated fairly.
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