California Cracks Down on 'Predatory' Early Cancellation Fees

California has enacted new legislation that aims to limit companies from charging consumers 'exorbitant' fees to cancel fixed-term contracts. From a report: Assembly Bill 483 was signed into law by California Gov. Gavin Newsom on Friday, placing transparency requirements and fee limits on early terminations for installment contracts -- plans that allow consumers to make recurring payments for goods and services over a specified duration.

This includes services that lure consumers into signing annual contracts by allowing them to pay in installments that appear similar to rolling monthly subscriptions, but with hefty cancellation fees for not locking in for the full year. The bill bans companies from hiding early termination fee disclosures within fine print or obscured hyperlinks, and limits the total fee amount to a maximum of 30 percent of the total contract cost. The goal is to make it easier for Californians to take these fees into account when comparing between services, and lessen the financial burden if they need to end their contract early.

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