Highlights
- California Gov. Gavin Newsom signed into law multiple new pieces of legislation in October 2025 aimed at strengthening consumer protections and reducing financial burdens for working families.
- Portions of these laws may create new opportunities for consumers to initiate litigation in California.
- Companies engaging with California consumers should anticipate compliance challenges and potential exposure to new types of consumer lawsuits.
In October 2025, California Gov. Gavin Newsom signed into law multiple new pieces of legislation with the goal of strengthening consumer protections in California and alleviating financial burdens on working families. Portions of the new legislation are likely to result in new avenues for consumers to bring litigation in California. Companies doing business with California consumers should be prepared to address the following laws, which may lead to new types of consumer litigation.
Senate Bill (SB) 82 – Contracts: Consumer Goods and Services: Dispute Resolution Provisions
This law restricts arbitration agreements in contracts for the sale or lease of consumer goods and services entered into after Jan. 1, 2026, providing that such arbitration provisions "shall be limited to a claim arising out of the contract containing the agreement to arbitrate." The goal is to prohibit companies from forcing consumers into arbitration for disputes unrelated to the contract.
This law is designed to limit the types of disputes that can be compelled to arbitration. Although this new law is expected to be challenged (likely on the grounds that it is preempted by the Federal Arbitration Act), until that happens it creates uncertainty as to the enforceability of certain arbitration provisions in California. This could have wide-reaching implications for companies operating in California. It is anticipated that this law will result in increased challenges to arbitration provisions that have previously been upheld by California courts, as plaintiffs' attorneys will argue the scope of the provision must be strictly limited under the new statute. Court decisions on these new arbitration clause restrictions will be closely watched.
Assembly Bill (AB) 1374 – Rental Passenger Vehicle Transactions: Third Parties
This law enhances and supplements existing law requiring car rental companies to provide disclosures to consumers regarding mandatory charges, including requiring them to disclose the total charges estimated for the entire rental as soon as the information is available, clearly indicate the fuel source, and provide a quote with total charges and all mandatory charges specified. The statute also extends these requirements to third parties renting vehicles.
This law is part of the recent trend of legislation intended to combat hidden mandatory fees in a variety of consumer contexts. Car rental companies, as well as other third-party companies providing rental vehicles, should be aware of these new disclosure requirements and adjust their rental processes accordingly. Although it does not appear to explicitly create a private right of action, consumers may attempt to enforce this law through California's Unfair Competition Law (UCL) and/or Consumer Legal Remedies Act (CLRA) statutes.
AB 578 – Food Delivery Platforms: Customer Service
This law adds to the existing law that imposes various restrictions on the business practices concerning food delivery platforms (e.g., Grub Hub) that was enacted with the Fair Food Delivery Act of 2020. AB 578 strengthens these protections in several ways:
- Food delivery platforms are prohibited from maintaining a payment model that uses any amount designated as tips or gratuity to offset the base pay to the delivery person.
- It is required that an accurate, clearly identified and itemized breakdown of the pay received for a delivery be disclosed to the delivery person, including the base pay, gratuity or tips, and any promotional bonuses.
- Food delivery platforms must include a clear and conspicuous customer service feature that allows a customer to contact a natural person. Automated systems are still authorized, but if the automated system is unable to address the customer's concerns, the customer must be able to promptly connect with a natural person.
- A full refund is required if an order is not delivered or the wrong order is delivered, and a partial refund is required if an order is only partially fulfilled.
Over the years, lawsuits have been filed against food delivery platforms for unfair business practices. These added prohibitions and requirements may give rise to new litigation in the food delivery space.
SB 709 – Self-Service Storage Facilities: Rental Agreement Disclosures
This law amends California's Self-Storage Facility Act, which established procedures governing the operation of self-service storage facilities, including specifying remedies for facility owners when occupants are delinquent in paying rent or other charges. This law requires that rental agreements initially entered into on or after Jan. 1, 2026, disclose certain items, including whether the rental fee is discounted or promotional, whether the rental fee is subject to change, and the maximum rental fee that the owner could charge during the first 12 months following the date of the rental agreement. Failure to provide these fee disclosures could result in consumer litigation against self-service storage facilities.
SB 766 – California Combating Auto Retail Scams (CARS) Act
The CARS Act prohibits dealers from the following acts:
- misrepresentations regarding material information about costs or terms of purchasing, financing or leasing a vehicle, the availability of vehicles at a total price communicated by the dealer, and the remedy available if a dealer fails to sell or lease a vehicle at the total price
- failure to disclose clearly and conspicuously specified information relating to the total price and any add-on products and services (used vehicles sold at auction are exempted from this provision)
- charges in connection with the sale or financing of a vehicle, including an add-on product or service if the vehicle purchaser or lessee would not benefit from the add-on product or service
- sales or leases of specified used vehicles without providing a three-day right to cancel the purchase or lease
Furthermore, a dealer is required to create and retain all records necessary to demonstrate compliance with the CARS Act for a period of two years from the date the record is created.
The CARS Act opens up the possibility of increased consumer litigation in the auto retail space, as it enhances the requirements for disclosures by car dealerships and impacts what is permissible in a vehicle retail sales contract or lease.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
