In California, a new law effective July 1, 2024, targets hidden fees, including credit card surcharges. This legislation, Senate Bill 478, mandates that businesses must include all mandatory fees in the advertised prices of goods and services. The goal is to eliminate the practice of “drip pricing,” where customers are initially shown a lower price, only to have additional fees added during the checkout process​ (GreenbergTraurig)​.

For businesses, particularly restaurants, this means that any surcharges, such as those for credit card payments, must be incorporated into the menu prices rather than added at the time of payment. This change aims to ensure transparency, so customers know the full cost upfront and are not surprised by extra charges when they pay​ (KQED)​.

However, certain transactions in regulated industries may be exempt from this requirement, and optional fees (like tips) can still be added separately, provided they are clearly disclosed. The intent behind this law is to protect consumers from deceptive pricing practices and to promote fair competition among businesses​ (GreenbergTraurig)​​ (KQED)​.

The new law does not mandate dual pricing. Instead, it mandates that businesses must incorporate all mandatory fees into the advertised prices of goods and services. Dual pricing, on the other hand, involves displaying two different prices for cash and credit card payments, where customers can choose to pay a lower price if they use cash and a higher price if they use a credit card.

The purpose of Senate Bill 478 is to ensure price transparency by requiring that the total price, including any surcharges, is displayed upfront, preventing any unexpected fees from being added at the point of sale. This differs from dual pricing, which allows businesses to display separate prices for different payment methods but must also ensure transparency in the price differences​ (GreenbergTraurig)​​ (KQED)​.

If you are currently adding a fee for card payments please contact us, we will review your program at no cost or obligation to make sure you are compliant.