The listed price for a concert ticket, hotel room, internet, airline seat and so many other items is seldom what someone actually ends up paying. The final bill is often much higher because fees that are often hidden.
California and federal lawmakers want to stop the practice of what they call “junk fees”.
State Senate Bill 478 would eliminate many of these mandatory fees through truth in advertising.
“Time after time even in my own world as I’m online making reservations or buying products I see hidden fees. The price you get upfront is people trying to lure you to buy their product or service, but by the time you check out the price is different,” state Sen. Bill Dodd, D-Napa, said.
Dodd introduced the legislation this year with state Sen. Nancy Skinner, D-Oakland.
“Hopefully, the advertised price will be what people pay,” Dodd said of what the bill will do for consumers.
The Consumer Federation of California, a nonprofit advocacy group for consumer rights, on March 6 unveiled a six-bill package targeting specific industries that attach junk fees to rental housing, small business financing, electric vehicles, event tickets, lodging, and car rentals.
“A number of industry sectors have convenience fees. They ought to be disclosed,” CFC Executive Director Robert Herrell said after the press conference.
He sees this bundle of legislation and SB 478 complementing each other.
Also interested in the California legislation is state Attorney General Rob Bonta, who is advocating for the passage of SB 478.
“Transparency and full disclosure in pricing are crucial for fair competition and consumer protection,” Bonta said during a press conference. “Unfortunately, from car rental and hotel fees to concert ticket service charges, these hidden costs have been normalized in the purchasing process. Today’s legislation seeks to hold businesses accountable for their deceptive and misleading practices at the expense of the financial security of millions of Californians.”
The state law complements what is being talked about at the federal level with the Junk Fee Prevention Act.
It is of such importance to President Bident that he spoke about it at the annual State of the Union speech in February.
“We’ll ban surprise resort fees that hotels tack on to your bill. These fees can cost you up to $90 a night at hotels that aren’t even resorts,” Biden said in his national address. “We’ll make cable internet and cell phone companies stop charging you up to $200 or more when you decide to switch to another provider.”
Some of the other junk fees being targeted include charges applied by rental car companies, on airport parking, restaurant service fees, food-delivery charges, and the automobile industry.
United Airlines heeded the call for change with the elimination of its hidden fee for parents wanting to book seats with their children
Momentum has been gaining to put the kibosh on junk fees at the federal level since last fall.
The Federal Trade Commission in October said it was going to begin exploring regulations that would curtail or stop the practice of junk fees.
In a statement FTC Chair Lina Khan said, “No one has ever felt that a ‘convenience fee’ was convenient. Companies should compete to provide the best quality at the best price, not to see who can squeeze the most added expenses out of consumers.”
Slow to react
Advocacy groups with members that would inevitably be impacted by at least some of the proposed legislation are on the sidelines for now.
The California Travel Association, a membership organization that lobbies for the industry, met at the end of February with SB 478 on the agenda.
After the meeting, Emellia Zamani, director of government affairs, said, “CalTravel still doesn’t have enough information to take a position on SB 478. I think we’ll know more as the bill gets closer to its first policy committee hearing this spring.”
The California Hotel & Lodging Association doesn’t believe the bill would affect a large number of its members.
“Resort fees no longer are common practice, with only about 7 percent of California hotels currently using them. These, typically, are properties that have far more available amenities than other lodging facilities,” Pete Hillan, spokesman for CHLA, said.
He did not provide a list of those properties.
According to research firm IBIS World, there are 4,998 hotels and motels in the state. Seven percent of that figure is about 350.
Hillan contends, “The small number of California hotels that have resort fees fully disclose to guests the charges up front.”
When it comes to SB 478, Hillan said CHLA has not taken a position.
The Golden Gate Restaurant Association also has not taken a stance on SB 478.
“What we have always advised our members is if you are going to include a service charge, you need to make it clear on the menu,” Amy Cleary, director of public policy and media relations for the GGRA, said.
Note: A version of this story first appeared in the North Bay Business Journal.