California businesses now face an added compliance challenge in an ever-changing legal environment: a crackdown on “junk fees.”  The California Honest Pricing Law (SB 478) is now in effect, as well as the Federal Trade Commission’s (FTC) new Junk Fees Rule, which means companies in many industries will have to reconsider how they advertise and disclose fees and charge fees or face the risk of lawsuits, penalties, and reputational harm. 

As a business law firm, Strategy Law is watching these changes closely to assist California businesses in staying compliant as well as competitive. 

What the New Laws Require

Under the FTC Rule on Unfair or Deceptive Fees, designated businesses must disclose the full price up front, but may exclude any taxes imposed by governmental bodies and shipping fees. Although aimed at protecting consumers, the rule requires ticketing platforms, hotel reservations, and other industries to change their systems. 

California’s legislation SB 478 goes far beyond the FTC Rule. The federal rule has an extremely narrow focus on live-event ticketing and short-term lodging; SB 478, on the other hand, broadly encompasses all consumer-facing industries, including gyms, salons, retail goods, and personal services. 

How does this affect businesses? The advertised or listed price must include all mandatory fees or charges that a consumer must pay (excluding taxes and certain shipping/postage costs). 

Why This Is a Bigger Risk for California Businesses

Businesses in California are at more risk because: Private Lawsuits: State law allows private consumers and non-consumers to bring lawsuits, seek statutory damages, recover attorney’s fees, and file class action lawsuits. Violations are actionable under the CLRA — consumers may recover actual damages or $1,000 minimum per violation (whichever is greater), injunctive relief, restitution, and attorney’s fees.

Tightened Scrutiny: Even the most well-meaning businesses face claims that their disclosures were not “conspicuous” enough or that fees that they considered optional were in-fact mandatory and should have been included in the advertised rate. 

Technology Complications

A large number of companies use third-party platforms, such as delivery apps, ticketing systems, or booking engines, which were not built with all-in pricing. It will take time to update those systems and there is often little incentive for software developers to help firms comply with all-in pricing rules. 

National companies also face a dilemma as they can either

• Use California’s all-in pricing rules across the whole country, or
• Operate with two sets of policies that will confuse customers, given that companies will have to use the same policies in different parts of the country.
  

How a Business Lawyer Can Help

Understanding these laws takes a legal perspective and a practical approach. A qualified business attorney can:

– Evaluate whether your pricing, contracts, and disclosures comply with the law/

– Provide strategies for risk management to decrease the risk of lawsuits.

– Negotiate vendor agreements to ensure compliance with California regulations.

– Provide ongoing counsel as regulators and courts interpret the applications of these laws.

The business law group at Strategy Law works with California business owners and companies to modify their practices while protecting the business’s bottom line.

This blog is written as of October 2025.  Recommendations and legal requirements are changing rapidly, so please continue to review our legal updates or review postings on relevant government websites.

All blogs on this site are for educational purposes only, do not constitute legal advice or opinion, and should not be applied to your situation, or any specific situation, without consultation with counsel. Strategy Law, LLP does not provide any legal advice concerning any matter discussed in a blog except upon formal engagement including, without limitation, execution of Strategy Law, LLP’s formal legal services agreement, and with respect to specific factual situations.  No blog constitutes a guaranty, warranty, or prediction regarding the result of any legal matter discussed in the blog or any representation