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State of California Department of Justice
Rob Bonta
Attorney General
Attorney General
Beginning July 1, 2024, the “Honest Pricing Law” or “Hidden Fees Statute,” SB 478, which was recently amended by SB 1524, makes it illegal for most businesses to advertise or list a price for a good or service that does not include all required fees or charges other than certain government taxes and shipping costs. SB 478 is a price transparency bill. The statute does not change what price a business can charge or what may be included in that price. The law simply requires that the price listed include all mandatory charges.
Put simply, the price a Californian sees should be the price they pay.
Mandatory fees charged by restaurants, bars, and other select food vendors are exempted from SB 478’s requirements so long as the fee is clearly and conspicuously displayed wherever prices are shown (see SB 1524).
In order to help businesses comply with this new law, and to offer consumers guidance about what they can expect, the Attorney General’s Office is releasing a set of FAQs. The law is found at Section 1770(a)(29) of the California Civil Code.
The law is “intended to specifically prohibit drip pricing, which involves advertising a price that is less than the actual price that a consumer will have to pay for a good or service.” Advertising or listing a price that is less than what a consumer will eventually be charged is a form of deceptive advertising that also violates existing state and federal law. Truthful price advertising helps businesses compete fairly on price and allows consumers to make accurate price comparisons.
The law applies to the sale or lease of most goods and services that are for a consumer’s personal use. For example, it applies to event tickets, short-term rentals, hotels, and food delivery platforms, just to name a few prominent industries. The law does not apply to the purchase or lease of goods or services for commercial use, or to certain other specified transactions and industries that are already subject to other laws governing pricing.
Most of these rules do not apply to the sale of individual food or beverage items to a customer by a restaurant, bar, food concession, or grocery store, by a grocery delivery service that is owned by or under contract with a grocery store or food distributor, or pursuant to a banquet or catering services contract or menu.
The law requires honest pricing. It prohibits businesses from “[a]dvertising, displaying, or offering a price for a good or service that does not include all mandatory fees or charges” other than government-imposed taxes or fees or reasonable shipping costs. The text of the law can be found at section 1770(a)(29) of the California Civil Code.
The listed or advertised price does not need to include taxes and/or fees that the government imposes on the transaction, such as sales tax. In addition, the listed or advertised price does not need to include reasonable shipping costs for physical goods.
No. SB 478 is a transparency law – not a price control law. A business is generally free to charge whatever amount it wants for a good or service, to provide a subsequent breakdown of the various fees or charges that are included in its listed or advertised price, and to tell the consumer about those fees and charges. But the posted price must include all amounts that the consumer will be required to pay.
No. A business is generally free to charge however much it wants and can then provide a breakdown of the various fees that are included in its listed or advertised price. But the posted price must include the full amount that a consumer must pay for that good or service.
A business can exclude shipping charges, but not handling charges. In the words of the statute, a business can exclude from its advertised price “[p]ostage or carriage charges that will be reasonably and actually incurred to ship the physical good to the consumer.” Like any other mandatory fee or charge, a handling charge must be included in the advertised price.
No. Fees for optional services or features do not need to be included in the advertised price.
The law requires mandatory fees to be included in advertised prices. Fees that are contingent on certain later conduct by a consumer, such as a fee for returning rented equipment after the deadline to do so, or charges for smoking in a non-smoking hotel room, are not mandatory and do not need to be included in the advertised price.
No. The advertised or listed price must be the full price that the consumer is required to pay.
Mandatory fees charged by restaurants, bars, and other select food vendors are exempted from SB 478’s requirements so long as the fee is clearly and conspicuously displayed wherever prices are shown (see SB 1524).
No. The price advertised to the consumer must be the full price that the consumer is required to pay.
Mandatory fees charged by restaurants, bars, and other select food vendors are exempted from SB 478’s requirements so long as the fee is clearly and conspicuously displayed wherever prices are shown (see SB 1524).
No. The price listed or advertised to the consumer must be the full price that the consumer is required to pay.
Mandatory fees charged by restaurants, bars, and other select food vendors are exempted from SB 478’s requirements so long as the fee is clearly and conspicuously displayed wherever prices are shown (see SB 1524).
Generally, no, because a credit card processing fee is not a mandatory fee if the customer can avoid the fee by paying a different way (e.g. cash.) However, if a business only accepts credit cards as a form of payment, then the credit card fee is mandatory and would have to be included in the advertised price.
Yes. The price advertised to the consumer must be the full price that the consumer is required to pay. But the law does not limit a merchant’s ability to include fees or charges in that total price, or to tell consumers that its prices include those fees or charges.
Yes. The price listed or advertised to the consumer must be the full price that the consumer is required to pay.
If a business chooses to list a price for a good or service, the advertised price must be the entire amount the consumer will have to pay, not including any fees for optional services or features, taxes, or shipping charges. Businesses that do not know how much they will charge a customer at the beginning of a transaction should wait to display a price until they know how much they will charge. Businesses should be aware that other state and federal laws prohibit certain forms of price discrimination.
Food delivery platforms are subject to special requirements under Business and Professions Code section 22598 et seq. when they list the prices charged by a restaurant from which they deliver food, and this law does not change those requirements. But when the food delivery platform advertises the price of the delivery service that it provides, it must advertise the full, all-in price of the delivery service.
No. The listed or advertised price for goods or services covered by the law must include all mandatory charges except for reasonable shipping costs for physical goods and taxes and/or fees that the government imposes on the transaction, such as sales tax. A business is free to provide a subsequent breakdown of the business’s intended use of the various fees.
Mandatory fees charged by restaurants, bars, and other select food vendors are exempted from SB 478’s requirements so long as the fee is clearly and conspicuously displayed wherever prices are shown (see SB 1524).
This law does not affect tips or gratuities left by customers, since they are not mandatory. These voluntary payments to workers are governed by other laws, including Labor Code section 350. For more information see this FAQ from the California Labor Commissioner.
No. A business that offers discounts or otherwise charges a customer a price that is less than the advertised price has not violated this law. The law just prohibits advertising a price that is less than what the customer will have to pay for a good or service.
Yes. SB 478 prohibits advertising a price that is less than what a consumer will have to pay for a good or service. Advertisements that mention discounts – but that do not list a price – do not violate the law. However, other California laws prohibit advertising that is false or misleading, so businesses that advertise discounts must do so carefully and honestly.
Yes. SB 478 prohibits advertising a price that is less than what a consumer will have to pay for a good or service. It applies equally to online and brick-and-mortar businesses, as well as to the resale of event tickets and other goods and services.
Businesses are free to explain how they set their prices or to subsequently itemize the charges that make up the total price that they charge customers. However, the price they advertise or display must be the total price that customers will have to pay for the good or service. Knowing the price of a good or service is essential to competition, and displaying a price that is less than what the customer will actually be charged is deceptive.