As of July 2, 1024, California's Business and Professions Code is amended to impose a civil penalty of up to $10,000 for each knowing violation of strict transparent pricing standards for short-term lodging.
AB 537 applies to any hotel, residence or other place offering short-term” lodging (for 30 days or less), as well as any person or entity advertising a short term lodging price in California or from California (such as an internet site or platform).
The new law will be enforced by city, county and state legal officers. There is not private right of action under this statute.
AB 537 requires transparent pricing
for all short-term lodging
Effective July 1, 2024
by
Mark S. Adams
Hotel Dispute Lawyer, Partner & Senior Member
JMBM's Global Hospitality Group
AB 537, the California Resort Fee Law is misnamed. It should be the “Transparent Pricing for Short-Term Lodging Law”
Assembly Bill 537 (AB 537) was signed into law by Governor Gavin Newsom on October 13, 2023. It becomes effective on July 1, 2024, and adds a new Section 17568.6 to the California Business and Professions Code applicable to all advertising for short-term lodging.
The bill was originally nicknamed the “California Resort Fee Law,” but it applies to so much more than just “resort fees.” It applies to any advertising of a rate or charge for short-term lodging (hotel, motel, residence or other place for 30 days or less) in this state or from this state
What activity is covered?
The amended B&P Code section applies to all advertising (in this state or from this state) for short-term lodging.
What is short-term lodging?
Short-term lodging is defined to include hotels, motels, bed and breakfast inns, or other transient lodging.
It also includes any residential property advertised on a centralized platform and rented to a visitor for 30 consecutive days or less.
Who is covered?
The law applies to all of the following:
- Place of short-term lodging
- Internet website, application, or other similar centralized platform — such as a brand website, Airbnb, Expedia, Travelocity, Hotels.com, hoteltonight.com, or other travel booking platforms
- Any other person
What 2 things are required or prohibited to avoid violation?
There are two prongs or tests for transparency in short-term lodging under AB 537. It is a violation if a covered person does either of the following:
- Advertises a rate for the lodging, which does not include all mandatory fees, except taxes and government charges. (no drip pricing at any time)
- Takes a reservation from a consumer before disclosing the “total price” of the lodging with all taxes and government charges included.
AB 537 is the only legislation we know of that requires disclosure of all taxes and government charges before taking a reservation from a guest.
Who can enforce AB 537?
The new transparency in advertising short-term lodging rates can be enforced by
- City Attorney
- County Counsel or DA
- State Attorney General
Unlike many Junk Fee laws or proposals, AB 537 does not provide consumers with a private right of action to sue directly.
What is the civil penalty?
Any person who knew or should have known that it has advertised, displayed, or offered a room rate in violation of B&P Code Section 17568.6 is subject to a civil penalty not exceeding ten thousand dollars ($10,000) for each violation.
We expect that city, county, and State enforcement officers will send each violator a written notice of apparent violation so that when enforcement starts, there will be no question as to the “knowing” violation.
Impact on Short-Term Lodging
Under AB 537, “short-term lodging” refers to temporary accommodations rented to visitors for a brief period, typically less than 30 consecutive days. This category includes various lodging options such as hotels, motels, bed and breakfast inns, and similar transient lodging establishments.
Additionally, it encompasses short-term rentals of residential properties, which are often facilitated through online platforms like Airbnb, VRBO, and similar websites or applications. AB 537's definition is broad to cover different types of accommodations that are rented out for temporary stays. This ensures that all forms of short-term lodging are subject to the same transparency requirements regarding the inclusion of all mandatory taxes and fees in advertised room rates.
Part of a greater consumer and regulatory backlash
The push for greater transparency in pricing, as embodied by AB 537, is part of a larger effort to protect consumers from misleading advertising and hidden costs, such as SB 478 (known as the “Truth in Advertising Act”), HR 6543 (known as the “No Hidden FEES Act of 2023”), and a new proposed FTC rule (known as the “Trade Regulation Rule on Unfair or Deceptive Fees”).
If enacted, one or more of the federal bills, such as HR 6543, would preempt state laws on the same issue, at least to the extent the state bill is more lenient on its requirements.
Click here to read the bill text for CA AB537.
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