(The Center Square) – There are a handful of consumer protection laws Californians will see in 2025. Come Jan. 1, these five bills will take effect:
AB 2017 – Declined transaction fees: Proposed by Sen. Timothy Grayson, this bill will prohibit state-chartered banks and credit unions to charge account holders a fee if a transaction is declined due to an account balance being too low. This law codifies a proposed rule from the Consumer Financial Protection Bureau.
“NSF and overdraft fees are extremely high and bear no resemblance whatsoever to the actual costs to the financial institution of processing NSF and overdraft fees,” reads a statement from the California Low-Income Consumer Coalition and East Bay Community Law Center. “In other words, NSF fees are not proportional to their actual cost to the financial institution whatsoever.”
SB 1075 – Overdraft fees: Also targeting banks and credit unions, this bill proposed by Sen. Steven Bradford sets limits on the amount account holders can be charged in overdraft fees. The bill also requires the credit union to provide a notice to the member if they assess a fee, giving them a five-day grace period to fix the overdrafts before the fee is charged.
While the advanced notice and the ability to rectify the overdrafts take effect in the new year, the part of the law capping the maximum fee to be charged at $14 will not take effect until Jan. 1, 2026.
“Low-income workers across California are struggling to make ends meet, and surprise overdraft fees can be a major financial setback,” reads a statement from the California School Employees Association. “SB 1075 offers critical protections by providing our members who bank at credit unions with a five-day grace period to fix overdrafts before fees are charged. This breathing room can mean the difference between putting food on the table or getting hit with a penalty that throws their budgets off track.”
SB 1061 – Medical debt: Sen. Monique Limon’s bill prohibits agencies from including medical debt on an individual’s credit report and impacting their credit score. Additionally, the bill grants more time to individuals to address medical bills before debt collection and reporting can take place.
“I am proud to author legislation to provide relief to Californians suffering from the burden of medical debt,” Limón said. “No Californian should be unable to secure housing, a loan, or even a job because they accessed necessary medical care. With this new law, California is stepping up to protect consumers impacted by the effects of medical debt.”
The California Association of Collectors and the Receivable Management Association International oppose the bill, noting that it would cause disruptions in the reporting, processing and collection of debts, saying it would be detrimental to consumers, medical providers and the business community.
“[It] is so broadly written that it runs the risk of reclassifying other loan products, including home equity loans and banking lines of credit, as medical debt based on consumer action,” reads a statement from the association. “Furthermore, it pulls into the definition of medical debt specialty health-based credit cards that are issued to consumers with prime credit ratings that are primarily used for the purchase of cosmetic, veterinary, and personal fitness products. The voiding of debt is a tremendous overreach and would amount to an improper taking.”
AB 2863 – Subscription traps: Assemblymember Pilar Schiavo proposed this bill to “strengthen consumer rights around subscription services and free trials.” Beginning on Jan. 1, companies will be required to get “clear consent” before charging customers after a free trial ends and send annual reminders about recurring changes. Additionally, customers must receive advanced notice of price changes so they can decide whether to continue with the subscription.
The Craft Wine Association says that the alcohol subscription services should be exempt from this bill.
“The current language of AB 2863 captures a wide range of business models, including those that do not fit the problematic practices the bill aims to address,” reads a statement from the association. “Wine clubs typically do not adhere to a fixed billing amount or schedule. Members often customize their shipments, adjust quantities, and change selections based on personal preferences, seasonal availability, and vintage variations. Our members are small independent producers who would be disproportionately affected by the additional compliance costs mandated by the legislation.”
SB 1490 – Food delivery apps: Proposed by Sen. Maria Elena Durazo, this bill will create further regulations for food delivery apps. This will ensure that the food delivery platforms can’t misrepresent fees. Additionally, the platform will not be able to keep a restaurant on their app without permission and there must be a “straightforward way” for a restaurant to be removed from the platform if they choose.
“This means local businesses have more control, and there will be more honest pricing and disclosures when ordering food or beverages online,” reads a statement from Gov. Gavin Newsom.
