California Cracks Down on Exorbitant Early Cancellation Fees with New Transparency Law

California Cracks Down on 'Predatory' Early Cancellation Fees In a move aimed at protecting consumers from exorbitant fees, California Governor Gavin Newsom signed Assembly Bill 483 into law on Friday. The legislation places transparency requirements and fee limits on early terminations for installment contracts, which allow consumers to make recurring payments for goods and services over a specified duration. Under the new law, companies are prohibited from hiding early termination fee disclosures within fine print or obscured hyperlinks. Additionally, the total fee amount is capped at 30 percent of the total contract cost. This change aims to make it easier for Californians to compare services and avoid unexpected financial burdens when ending contracts early. "This bill will help consumers understand what they're getting into when signing a contract," said Assemblyman David Chiu, who sponsored the legislation. "By requiring transparency and capping fees, we can prevent predatory practices that take advantage of unsuspecting consumers." The law targets installment plans that lure customers with annual contracts by allowing them to pay in installments similar to rolling monthly subscriptions. However, these contracts often come with hefty cancellation fees for not committing to the full year. Consumer advocates have long criticized such practices as "predatory" and argued that they can lead to financial hardship for those who need to end their contracts early. The new law aims to address this issue by promoting transparency and fairness in contract terms. The bill's passage is seen as a significant step forward in protecting consumers from unfair business practices. As one consumer advocate noted, "This legislation sends a clear message that California will not tolerate companies taking advantage of its citizens." The implementation of the new law is expected to take effect on January 1, 2024. Companies must comply with the transparency requirements and fee limits by this date. In related news, other states are considering similar legislation to protect consumers from unfair contract terms. As consumer advocacy groups continue to push for greater protections, it remains to be seen whether California's lead will inspire a national trend. The passage of Assembly Bill 483 marks a significant development in the ongoing effort to promote transparency and fairness in business practices. By limiting early termination fees and promoting transparency, California aims to empower consumers with more informed choices when signing contracts. *Reporting by Slashdot.*