HIDDEN fees will soon be banned at businesses across California as a new state law takes effect.
Some restaurants said they have used surcharges as a way to make ends meet with expensive expenses such as salaries and rent.
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The ‘Honest Prices Act’ or ‘statue of Hidden Fees’ – Senate Bill 478 – goes into effect on July 1 and will make it illegal to advertise a price lower than the final cost, plus taxes, ranging from three to six percent.
The California Department of Justice insists that the law is a “transparency law” and is not intended to be a “price control law,” according to the bill, for Smaller.
The Butcher’s Cut Steakhouse in the Gaslamp Quarter is located in San Diego and the owner of the party, Rodolfo Salum, said the restaurant counts on the $3.75 surcharge.
“It’s not just for us, it’s an increase in all expenses, you know, minimum wage, rent,” Rodolfo told the Fox affiliate KSWB.
“There are so many expenses – and everything is increasing,” said Rodolfo.
Rodolfo explained that even with the increase, the steakhouse occasionally does not make a profit.
“It’s not like we’re making that much money – some months you just break even,” he said.
Given this, Rodolfo said that prices will need to increase to compensate for the loss from the surcharge.
“Now coming to dinner will be a little more expensive, why?” Rodolfo said.
“Because we need to cover these expenses.”
Economics expert Dr Alan Gin suggests, however, that charging customers more this way is fairer in the long run.
“Customers will pay the same amount as before and receive the same amount as before,” Gin told KSWB.
“The price then comes closer to reflecting what customers will have to pay.”
SHOCKED OVERLOAD
Mana Moriarty, who works in consumer advocacy, discovered a 15% surcharge added to the total on Fox affiliate Hawaii KHON-TV reported.
The surcharge also exceeded the state limit of 4.712% and she realized it had been charged illegally.
“This was done completely wrong,” the official said.
“There is no way this tax could have been properly disclosed.”
What is Senate Bill 478?
- Effective date: July 1, 2024.
- Application: California businesses, including restaurants, must include all required fees or surcharges in the advertised price, except taxes and shipping.
- Purpose: To mitigate “trickle down pricing,” where a lower price is announced but mandatory fees are added later.
- Roof: It applies to event tickets, short-term rentals, hotels, restaurants, food delivery, and most consumer goods and services.
- Transparency Law: Ensures the listed price is the total amount the consumer will pay, not just a base price with hidden fees.
- Impact on the restaurant: Mandatory service fees or surcharges must be included in the price shown.
- Execution and Penalties: Violations may lead to legal action under the California Consumer Legal Remedies Act, with potential penalties including actual damages or $1,000 per violation, plus restitution, punitive damages and attorneys’ fees.
- Industry Concern: This law increases pressure on the hotel industry, which is already facing higher wages and costs, and could lead to an increase in litigation.
Credit: Smaller
Another diner, Ashley St. Clair, shared a surcharge she found, saying it was to ensure the well-being of her staff.
“What the hell is this? I just received this from a friend. Restaurants in Los Angeles are charging a 4% ‘LA Health’ fee,” the post he said.
The fee came with an explanation that said, “The charge is to keep ’employees healthy and happy’ and is apparently citywide for customers to cover health insurance for restaurant employees.”
This story originally appeared on The-sun.com read the full story
