Room rate was $249, but didn’t mention $90 in fees. California bill aims to stop that

Ted Mermin booked a hotel room for his family of four, advertised online at a reasonable-sounding $249 a night. But when they checked out, they were told there was an additional $50 “resort fee” plus a $40 charge for “incidentals.”

There wasn’t a “resort” at the place, and the hotel couldn’t tell Mermin what the “incidentals” fee covered, though he noted it wasn’t the empty soap and shampoo dispensers. As executive director of the California Low-Income Consumer Coalition, he pushed back, and the proprietor waived the additional fees. But Mermin cited it to explain why his organization backs a California bill aiming to outlaw hidden or “junk” fees.

“In my case it’s an inconvenience,” said Mermin, who would not identify the hotel or its location. “But for many Californians, hidden fees like this are the difference between whether a person can make it through the month and pay for the necessities of life. That’s not the way we should be operating.”

SB 478 by Sen. Bill Dodd, D-Napa, would add to the state’s laws against deceptive and dishonest advertising by prohibiting sellers from luring consumers with a low headline price before revealing additional charges and fees in smaller print, or after the buyer has already begun the purchase process.

“The principle behind this bill is simple,” Dodd told lawmakers at a recent committee hearing. “The final purchase price for a good or service shouldn’t be a mystery for California consumers. The price they see should be the price they pay.”

California Attorney General Rob Bonta is sponsoring the bill, co-authored by Sen. Nancy Skinner, D-Oakland, which passed out of the Senate Appropriations Committee on May 17.

The California Chamber of Commerce is leading a coalition of business groups that are opposed, though they insist it’s not because they like hidden fees.

“I want to be clear: We are not here in support of hidden fees. That is not where our opposition comes from,” said Robert Moutrie, a California Chamber of Commerce policy advocate, at a recent committee hearing. “Our opposition here is about how the legislation accomplishes its goal, not the goal.”

Moutrie argued that state law already allows private lawyers and state prosecutors to bring false-advertising cases against fraudulent or deceptive sellers, citing as an example a $27.5 million, 2019 attorney general’s settlement with the former Paul Blanco’s Good Car Company.

Moutrie said businesses are concerned Dodd’s bill would expose them to additional liability. He added that some industries already fall under state or federal pricing regulations that aren’t exempted in the proposed legislation.

Dodd said in response that “our plan is to continue this conversation.”

It is hardly just a California issue, or limited to room rentals. President Joe Biden in his State of the Union urged passage of a federal Junk Fee Prevention Act.

“Americans are tired of being played for suckers,” Biden said in his speech. “We’ll ban surprise ‘resort fees’ that hotels tack on to your bill. These fees can cost you up to $90 a night at hotels that aren’t even resorts. We’ll make cable internet and cell phone companies stop charging you up to $200 or more when you decide to switch to another provider. We’ll cap service fees on tickets to concerts and sporting events and make companies disclose all fees upfront.”

But Dodd’s office said that Californians can’t wait for federal action. By one estimate, 85% of Americans have paid hidden fees totaling $28 billion per year, and California, with the nation’s largest state population, pays an outsized share, Dodd said.

He said existing state laws aren’t stopping the hidden fee scourge and more clarity is needed. There are several other pending bills that address hidden charges in particular areas.