Last year, California enacted a law which will generally require companies to include all mandatory fees when they advertise prices. Starting on July 1, 2024, the following practices will be unlawful:

Advertising, displaying, or offering a price for a good or service that does not include all mandatory fees or charges other than either of the following: (i) Taxes or fees imposed by a government on the transaction; [or] (ii) Postage or carriage charges that will be reasonably and actually incurred to ship the physical good to the consumer.

When the law was enacted, California AG Rob Bonta boasted that “California now has the most effective piece of legislation in the nation to tackle this problem. The price Californians see will be the price they pay.”

Like many other industries, restaurants have struggled with ways to comply with the law. Some in the industry speculated that the law may just require companies to be transparent about their fees. In a message to the San Francisco Chronicle last week, a California Department of Justice spokesperson took a different position:

SB 478 applies to restaurants, just like it applies to businesses across California. The law is about making sure consumers know what they are going to pay and requires that the posted price include the full amount that a consumer must pay for that good or service.

This fits with what we heard from California in November. In other words, the DOJ thinks it’s not enough to clearly disclose fees – they must be included in the posted price. (Note, though, that the law includes exceptions for “food delivery platforms.”) Although that may be simple in many instances, it’s not always the case. For example, companies in many industries are struggling with how they should display prices in instances in which the fees may vary based on various factors.

There are rumors that the state will provide more clarity – perhaps in the form of FAQs – but that hasn’t been confirmed. If the state is planning to do so, it would be helpful if they did that quickly. With less than two months to go before the law comes into effect, companies have little time to get things right.

California DOJ Dispels Myths on New Hidden Fee Law