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Critical Information for all BNT members!

California's SB 478 introduces significant changes to increase transparency in pricing practices by targeting "drip pricing." Here's a detailed overview:

What is Drip Pricing?

Drip pricing is a marketing strategy where the initial advertised price of a good or service is lower than the final price the consumer pays. Mandatory fees are incrementally revealed as the consumer progresses through the purchasing process, often resulting in a higher total cost than originally anticipated.

SB 478: Key Points

  • Amendment to the CLRA: SB 478 amends the California Consumers Legal Remedies Act (CLRA) to include prohibitions against drip pricing.

  • Prohibition on Hidden Fees: The bill explicitly bans advertising, displaying, or offering a price for goods or services that excludes mandatory fees or charges.

  • Objective: The aim is to ensure consumers are fully aware of the total cost upfront, thus protecting them from misleading pricing tactics.

Implications for Businesses

  • Compliance: Businesses must now ensure that all mandatory fees are included in the initially advertised price.

  • Transparency: This legislation demands greater pricing transparency, requiring businesses to disclose the full cost of their products or services from the outset.

  • Penalties for Non-compliance: Companies failing to comply with these new regulations could face legal action under the CLRA for engaging in unfair or deceptive practices.

Benefits for Consumers

  • Informed Decision-Making: Consumers will benefit from knowing the total price of a product or service before making a purchase decision, avoiding unexpected costs.

  • Fair Competition: The law promotes fair competition among businesses by preventing companies from deceptively using hidden fees to undercut competitors' prices.

Examples of Affected Sectors

  • Travel Industry: Airlines, hotels, and car rental companies often use drip pricing, showing low initial rates that exclude taxes, service fees, and other charges.

  • Event Ticketing: Concerts, sports events, and other entertainment venues frequently advertise ticket prices that do not include processing fees or surcharges.

Conclusion

SB 478 represents a significant step toward consumer protection in California by targeting the practice of drip pricing. This amendment to the CLRA underscores the state's commitment to transparent and fair business practices, ensuring that consumers can trust that the price they see is the price they will pay. Businesses operating in California will need to adjust their pricing strategies to comply with this new legislation, fostering a more honest marketplace.



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