California bans junk fees as the White House joins the fight against drip pricing

$20 concert tix… plus $35 in fees. CA Gov. Gavin Newsom’s been on a vetoing streak, striking down bills promising unemployment benefits for striking workers and decriminalized psychedelic mushrooms. But his tune changed with the signing of a bill banning “junk fees” as of next July. Also called “drip pricing,” junk fees are added costs that companies tack on at the end of transactions, often taking consumers by surprise. Picture: nightly “resort fees,” food-delivery “processing fees,” and “service charges” for tix.

• Nothin’ for somethin’: The FTC says junk fees cost US consumers tens of billions of dollars/year. But unlike splurging for a room upgrade (hello, ocean view), junk fees don’t add value for customers.

• Bait and switch: Companies that don’t slap on last-minute fees may at first glance appear pricier to bargain-hunting shoppers. That could translate to losing business to drip-pricing competition.

As goes California… so goes the nation? It’s not just the Golden State that’s fed up with such fees. Yesterday President Biden hyped proposed FTC rules that would require companies to list final prices (including any mandatory fees) up front. The FTC said that even if it were only applied to ticketing and lodging, the rule could save folks 50M+ hours/year of wasted time, as finding the actual best prices online would be more straightforward. By one estimate, that adds up to $10B+ in savings over the next decade.