California’s SB 478 bans drip pricing by requiring advertised prices to include mandatory fees, with limited exceptions for taxes and shipping. SB 1524 gives restaurants a carve-out, requires prominent fee disclosures, and explains what each mandatory charge covers.
By Brad Nakase, Attorney
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SB 478 was signed by Gavin Newsom (Governor) on 7th October 2023. The bill amended California’s Consumers Legal Remedies Act and added a new ban on so-called “California junk fees”, now sitting in Civil Code section 1770(a)(29)(A).
The target is drip pricing. The familiar tactic where a price looks low at first, then quietly grows as you move through checkout. A fee here, another one there. The number barely resembles what was advertised by the end.
That approach becomes illegal in California. Businesses can no longer advertise a base price and stack mandatory California junk fees later. If a fee is required, it has to be in the price shown to the consumer from the start—advertised, displayed, or offered.
There are limits. The law doesn’t require sellers to fold in government charges like sales tax. Shipping costs for physical goods are also excluded. But everything else that’s mandatory? It can’t be hidden anymore.
The Legislature carved out an exception some days before SB 478 was set to take effect. It came through SB 1524. It was aimed squarely at restaurants and similar food businesses. Governor Newsom signed it on 29th June 2024.
Under SB 1524, restaurants, bars, food concessions, and comparable businesses don’t have to fold mandatory California junk fees into the listed price. But there’s a condition, and it’s not optional. Any mandatory fee must be clearly and conspicuously disclosed. Not buried or implied. And not explained later.
The disclosure has to appear wherever the price appears—on menus, advertisements, or any other display—and it must explain what the fee is for. That requirement is now written directly into the statute. See Cal. Civ. Code § 1770(a) (29) (D) (ii).
There’s an important timing issue built into the statute. By July 1, 2025, any disclosure, notice, or advertisement that the law says must be “clear” or “clearly and conspicuously” displayed will have to meet a specific definition already sitting in the Civil Code. That rule appears in Section 1791(u), and Section 1770(c) makes it mandatory.
Under that definition, the text can’t blend in. It has to stand out. Larger than the surrounding text, or different in font, color, or style. It can also be set apart using symbols or other visual markers. The point is simple: the disclosure must actually draw attention to itself.
SB 478 & SB 1524 both took effect on July 1, 2024. But the technical requirements in Section 1791(u) don’t apply to the junk-fee rules until July 1, 2025. Until then, businesses and regulators are left in a gray zone, with no precise statutory guidance on what qualifies as “clear and conspicuous” for purposes of Section 1770(a) (29) (D) (ii).
The amended CLRA doesn’t spell this part out. There’s no definition for what counts as an “explanation of the fee’s purpose,” and no checklist to follow. That silence matters. It leaves room for interpretation, and with that comes risk.
Because of that, businesses are on their own to some extent. The safer approach is to be direct. Say what the California junk fees are for. Say how it’s used. Vague labels and generic language are more likely to invite scrutiny than protect against it. Clear, accurate descriptions—grounded in reality—are the best defense.
The stakes aren’t small. As with other CLRA violations, these claims can be brought by a single consumer or as a class action. If a plaintiff succeeds, the remedies add up fast. They can include actual damages or $1,000 per violation, whichever is higher. Courts can also issue injunctions, order restitution, award punitive damages, and require the business to pay attorneys’ fees. On top of that, judges have broad discretion to grant any other relief they find appropriate.
California’s push against so-called “junk” fees signals a broader shift. Lawmakers & regulators are paying closer attention to how prices are presented and where extra charges show up. The focus is clear: stop misleading pricing practices, confusing, or feeling unfair at the time of checkout.
This kind of change rarely stays quiet. Consumer claims are likely to follow, and not just isolated ones. Class actions, enforcement actions, and testing by regulators should be expected.
For businesses, waiting it out isn’t a strategy. Pricing structures and disclosures need a fresh look, sooner rather than later. The goal isn’t just compliance on paper, but reducing exposure, defending against scrutiny, and preserving customer trust. That matters even more with laws like SB 478 and SB 1524, where key terms are still open to interpretation and early missteps can be costly.
The California Attorney General’s Office put out a set of FAQs. The goal was simple: help businesses get ready for SB 478, the state’s new “Hidden Fees” law aimed at stopping drip pricing and other junk-fee tactics.
Alongside that release, Attorney General Rob Bonta made the point plainly. This isn’t about catching businesses out on technicalities. It’s about price transparency. People should know what they’re actually going to pay before they reach the end of the checkout screen. That’s it.
Bonta also stressed that the guidance was meant to be usable, especially for smaller businesses trying to adjust. The rule, as he put it, isn’t complicated. The price you see should be the price you pay. Compliance follows when expectations are clear. And when compliance is possible, the market stays fair—for consumers and for businesses alike.
SB 478 goes after California junk fees, with a clear focus on drip pricing. That’s the practice of advertising one price while knowing the consumer will end up paying more once mandatory fees are added.
The law treats that as deceptive. It updates the California Consumers Legal Remedies Act to require that the price shown upfront include all mandatory fees. There are a few carve-outs—certain regulated transactions and situations the CLRA doesn’t cover—but the core rule is straightforward. If the California junk fees are required, they belong in the advertised price.
FAQ important takeaways:
1. Price setting isn’t restricted: The FAQ makes one thing clear upfront: SB 478 doesn’t tell businesses what they can charge. Pricing is still up to the business. Fees can exist, and they can even be broken out and explained. The catch is that the advertised price has to reflect the full amount the consumer is required to pay. There’s no limit on what kinds of fees can be charged, only on how they’re presented.
2. The number shown must be the final number: The price a consumer sees has to be the total price. No mandatory add-ons later. No required fees are revealed at the end of checkout or after payment. The FAQ also shuts down a common workaround—advertising a low upfront price and then tacking on variable service fees as the transaction unfolds. If the fee is required, it has to be baked in from the start.
3. Restaurant pricing and compliance: The FAQ draws a firm line on how pricing has to work, restaurants included. Mandatory charges belong in the listed price. Full stop. The only exceptions are reasonable shipping costs and government-imposed taxes or fees.
Restaurants can still explain what’s baked into that price. A breakdown is allowed. What isn’t allowed is carving out required charges and tacking them on later. That includes fees tied to operating costs—security, wages, benefits, and similar expenses can’t be separated out and labeled as add-ons.
Tips are different. Voluntary gratuities are untouched by the law. But automatic gratuities are another story. The FAQ treats them as mandatory fees, which means they must be included in the advertised price.
Delivery fees fall on the other side of the line. When a customer orders food directly from a restaurant, delivery is considered an optional service. Those charges don’t have to be included in the advertised food price.
SB 478 doesn’t rewrite pricing from scratch, but it does change the rules of the room. What used to slide by as “industry practice” now gets looked at more closely. How prices are shown matters just as much as what they add up to in the end. And intent, while relevant, won’t save sloppy disclosures.
For businesses, this is less about fear and more about discipline. Take a hard look at how prices appear to customers. Not in theory. On screens, menus, and ads. If a fee is required, ask whether a reasonable person would expect it from what’s shown upfront. If the answer isn’t obvious, that’s where problems start.
There’s still gray space, especially with SB 1524 and the delayed “clear and conspicuous” standard. That uncertainty cuts both ways. Early enforcement will shape expectations, and missteps will be noticed.
The companies that do best here won’t wait for lawsuits to clarify the rules. They’ll simplify, explain, and move on. Clear prices reduce friction. They also reduce risk. Under SB 478, those two goals finally line up.
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