California has taken a bold step: shooting down “junk fees,” a business practice that has caught the attention of federal regulators and the Biden administration. California Governor Gavin Newsom signed legislation banning these fees from becoming hidden surprises at check-in or checkout time. The new law adds momentum to federal action as lawmakers in Congress are also moving on legislation to address the issue.
Junk fees are added to various consumer products and services, including food delivery, bank accounts and hotel stays. These fees, which far exceed the actual cost of the service, cost Americans at least $29 billion annually, according to the Consumer Financial Protection Bureau.
The law applies to hotel operators and third parties, such as Booking.com. It also applies to short-term rental platforms like Airbnb or Vrbo, which must show cleaning fees, service fees, host fees and other oft hidden costs in a list just before the customer books.
California’s move toward pricing clarity, a practice that is already standard in Europe, may set a precedent for other states. Minnesota passed similar legislation, and the American Hotel & Lodging Association now advocates for federal standardization to avoid a patchwork of state regulations. President Biden has also announced efforts to address junk fees, with the Federal Trade Commission proposing a rule to ban misrepresentations of total costs.
Meanwhile, chains such as Marriott, Hilton, Hyatt, Choice and Wyndham have all adjusted their pricing systems to comply with the new law. Noncompliance with California’s legislation could result in steep penalties of $1,000 per infraction, in addition to potential damages and legal fees.
Junk Fee Law: At a Glance
Hotel Resort Fees: Hotels must include mandatory resort fees in the advertised price, giving consumers a more accurate up-front picture of the total cost.
Hotel Parking Fees: Hotels must include fees in the advertised nightly rate or clearly display these fees during the booking process.
Early/Late Fees: Hotels must disclose any fees associated with check-in or checkout during booking.
Minibar Charges: Hotels must clearly list minibar prices or disclose a flat minibar fee up front.
Internet Fees: Hotels must clearly disclose any in-room fees during booking.
Airline Baggage Fees: Airlines must disclose all fees during the fare display.
