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- California governor Gavin Newsom has signed into law a new bill that outlaws hidden junk fees.
- This means Californians won't be blindsided by hidden costs for tickets and room bookings.
- The Consumer Financial Protection Bureau estimates that Americans spend at least $29 billion a year on junk fees.
Gov. Gavin Newsom of California on Saturday signed into law a new bill that makes putting hidden charges on purchases illegal, per NBC.
SB 478, proposed by California state Sen. Bill Dodds, took aim at junk fees — which are not displayed up-front in advertising — and declared them a deceptive business practice.
The new regulations will take effect on July 1, 2024.
"With Gov. Newsom's signing of SB 478, Californians will know upfront how much they're being asked to pay, and no longer be surprised by hidden junk fees when buying a concert or sports ticket or booking hotel rooms for their family vacation," wrote state senator Nancy Skinner, one of the co-authors of the bill, in a press release on Saturday.
The nonprofit watchdog Consumer Reports estimated in 2019 — based on a survey of more than 2,000 US adults — that 85% of Americans have been charged hidden junk fees. The Consumer Financial Protection Bureau said in 2022 that Americans spend at least $29 billion each year on junk fees, CBS reported.
These tacked-on fees also capitalize on consumers' psychological biases to get them to fork out more money, Vicki Morwitz, a professor at Columbia Business School, told Insider in September.
"I may realize at the end: 'This ticket's a lot more expensive than I thought — and maybe there's another option where I could get the ticket cheaper.' But consumers tend not to do that," Morwitz told Insider. "They tend to follow through on the purchase even when it's more expensive than they thought it was."
President Joe Biden has made combating junk fees a key priority for his administration since 2022. Biden said in July that "folks are tired of being played for suckers" as he announced measures cracking down on junk fees in the rental housing market.