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California's ban on hidden 'junk fees' takes effect in July

DON GONYEA, HOST:

Several states are looking to ban so-called junk fees - you know, those hidden costs that get tacked onto a bill for a hotel stay or a restaurant meal. California is one of those states. From member station KQED in San Francisco, Marisa Lagos reports.

MARISA LAGOS, BYLINE: President Joe Biden has made banning these fees a centerpiece of his strategy to tackle rising consumer prices.

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PRESIDENT JOE BIDEN: For example, we're making airlines show you the full ticket price up front.

LAGOS: But many of Biden's efforts have been slowed or stymied. Airlines and banks are suing, and his legislation to ban junk fees altogether has stalled in the Republican-led House. However, states are moving ahead with bans of their own. In California, a law will take effect July 1 that requires nearly all industries to disclose the full cost of what they're selling up front. Napa state Senator Bill Dodd, a Democrat, was one of the laws authors and says the issue is personal to him.

BILL DODD: A year ago, I took my three adult sons to the playoff game for the Warriors and the Kings, and it was just absolutely - I mean, they were pretty expensive tickets. But nevertheless, the amount that came as the fee - you know, somewhere around seven or $800 - just absolutely blew my mind.

LAGOS: Chuck Bell is an advocate at Consumer Reports, which works on behalf of consumers. He says Dodd's is not an unusual experience and exactly why the government needs to step in.

CHUCK BELL: People deserve to know upfront how much something is going to cost. It doesn't necessarily save them money. It doesn't require any business to lower their prices just to have transparent pricing. But it's something that's fair and gives the consumer peace of mind and economic security.

LAGOS: Still, businesses of all kinds pushed back, arguing that false advertising is already banned in California and that in many industries, prices are heavily regulated. Rob Moutrie from the state's chamber of commerce told lawmakers considering the legislation last year that the group's main concern was the bill's provision allowing private citizens, not just the government, to sue if they encounter these fees.

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ROB MOUTRIE: I want to be clear. We are not here in support of hidden fees. Our opposition here is about how the bill approaches its goal, not the goal.

LAGOS: With the law's implementation around the corner, it's the restaurant industry, though, that's been actively lobbying lawmakers for an exemption, saying they didn't know when the legislation was being debated last year that it included menu charges.

LAURIE THOMAS: The folks that were affected were not at the table.

LAGOS: Restaurant owner Laurie Thomas says the law will ban the practice of adding mandatory fees like automatic gratuity or tips, forcing restaurants to include those extra costs in menu prices or pay employees less.

THOMAS: So you can raise the prices, but then we anticipate consumers will do what my husband and I do. Oh, my God, that was expensive. We can't do that twice a week anymore. We can only do that once a week.

LAGOS: Thomas and others say diners are more amenable to a surcharge at the end of the meal than to higher prices for things like burgers and salads. But some diners say they prefer knowing the full price of everything on the menu up front. Ariana Wilson is a regular at Zazie, a French bistro known for its brunch menu. They include all costs in menu prices, and tell diners those costs pay for, quote, "a living wage" and extensive employee benefits.

ARIANA WILSON: I think part of why my family is so supportive of this business is because of how they take care of their employees. And I think the transparency at the top of the menu is nice to know what it's going towards.

LAGOS: Zazie is likely to stay in the minority. State lawmakers are considering legislation this week that would exempt restaurants from the so-called junk fee ban. Under the bill, they'd still be able to tack on automatic gratuity. They'd just have to disclose any surcharges and fees clearly on the menu.

For NPR News, I'm Marisa Lagos in San Francisco. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Marisa Lagos
[Copyright 2024 NPR]