California continues to lead the charge in consumer protection with two major developments: a 2024 settlement with StubHub over its refund practices during the COVID-19 pandemic and the enactment of Senate Bill 478, which addresses deceptive pricing practices. These measures demonstrate the state’s commitment to enforcing fair business practices and protecting consumer rights.

The Legal Basis for the StubHub Settlement

The StubHub settlement represents a significant victory for California consumers and a clear message to businesses about the importance of honoring advertised policies. During the pandemic, StubHub deviated from its "FanProtect Guarantee," which promised cash refunds for canceled events, opting instead to issue credits. This change violated the company’s own policies and left consumers without recourse.

California Attorney General Rob Bonta identified StubHub’s actions as violations of the Unfair Competition Law (UCL) and the False Advertising Law, which prohibit deceptive practices and misleading advertising. In the settlement, StubHub agreed to provide over $20 million in restitution to more than 45,000 California consumers and committed to strict compliance with refund policies going forward.

"By failing to issue full cash refunds for canceled events during the pandemic, StubHub not only violated its advertised policy but also violated the trust of its consumers...If you believe you are the victim of false or misleading advertising, please report it to oag.ca.gov/report.” -CA Attorney General Rob Bonta

This case sets a precedent for the ticket resale industry, emphasizing the need for transparency and accountability, especially during unprecedented disruptions like a global pandemic.

Senate Bill 478 – Strengthening California’s Consumer Protection Laws

Building on this legal momentum, Senate Bill 478 introduces groundbreaking measures to enhance pricing transparency. Effective July 2024, SB 478 bans the use of "drip pricing," a tactic where businesses advertise a base price but add mandatory fees at checkout.

The bill amends the Consumers Legal Remedies Act, making it unlawful to “advertise, display, or offer a price for a good or service that does not include all mandatory fees or charges,” except for government-imposed taxes or fees. Specific industries, such as car rentals, have exemptions if they comply with other disclosure requirements.

By addressing deceptive pricing strategies, SB 478 ensures consumers can make informed decisions based on the true cost of a product or service. It also holds businesses to higher standards of clarity and fairness in their advertising practices.

Intersection of StubHub Settlement and SB 478

The StubHub case highlights the necessity of robust consumer protection laws like SB 478. While the settlement resolves one specific instance of deceptive practices, SB 478 seeks to prevent such disputes from occurring in the first place by requiring businesses to advertise prices transparently.

For example, had SB 478 been in effect during the pandemic, StubHub might have been unable to implement its credit-only refund policy without facing immediate legal challenges. The legislation provides a legal framework to deter businesses from engaging in similar practices.

However, businesses may face compliance challenges as they adapt to these stricter regulations. Non-compliance carries significant legal risks, including penalties and reputational harm.

Broader Implications for Consumer Law

The StubHub settlement and SB 478 exemplify a growing trend in consumer protection, where enforcement actions and legislative changes work hand in hand to safeguard consumer rights. These developments have implications far beyond California:

• Setting a Precedent: Other states may look to California’s example and adopt similar legislation or enforcement strategies to protect their own consumers.
• Industry-Wide Changes: Sectors like ticket resale, car rentals, and online marketplaces must reassess their practices to comply with these regulations, potentially leading to nationwide shifts in how prices and policies are communicated.
• Legal Practitioner Role: Attorneys advising businesses must ensure compliance with the new laws while helping clients avoid litigation risks. Similarly, consumer advocates can leverage these developments to educate and empower the public.

Conclusion

The StubHub settlement and Senate Bill 478 represent a significant leap forward in consumer protection, reinforcing California’s leadership in the field. These measures emphasize accountability, transparency, and fairness, setting a high standard for businesses across industries.

For businesses, the message is clear: adapt to this new legal landscape or face the consequences. By proactively embracing these changes, companies can avoid penalties, build consumer trust, and thrive in an era of heightened scrutiny. Consumers, meanwhile, should stay informed about their rights and report violations to ensure these protections are effectively enforced.