California’s Pink Tax law: How new gender-based pricing regulations impact businesses

California Attorney General (AG) Rob Bonta recently issued a consumer alert reminding California consumers of their rights under Assembly Bill 1287. Assembly Bill 1287 – which went into effect on January 1, 2023 – prohibits businesses from charging a different price for substantially similar consumer products based solely on the gender of the individual at whom the goods are marketed and intended. Examples of products for which gender-based pricing is commonly found include, but are not limited to, toys, accessories, clothing, personal care products, and senior/home health care products. In particular, this practice of charging higher prices for essentially the same goods for products marketed toward women than products marketed toward men is known as a “Pink Tax.” Women make up as much as 85 percent of consumer purchases in the United States, but, according to studies, pay more for products marketed to women and girls 42 percent of the time. This law was enacted to directly address the financial impacts that unequal pricing has on women, girls, and their families.

Under this law, if the California AG has “cause to believe” that a violation has occurred, five days after notice to the accused company, they may seek a court order to enjoin the pricing differential. A court may issue this injunction without any proof that any person has actually been directly injured by this violation. In addition to injunctive relief, the court may also impose a monetary penalty not to exceed $10,000 for the first violation, and $1,000 for each subsequent violation up to $100,000. The court also has discretion to impose additional civil penalties if the defendant continues to violate the law with respect to the same goods.

The law does not provide a private right of action, but consumers are able to file complaints with the state AG’s office about products they believe exhibit price differentials based on gender. Given AG Bonta’s recent consumer alert, this action also signals an increased likelihood of enforcement actions regarding consumer products that are marketed to specific genders. This liability is not restricted to California as similar laws against gender-based price discrimination have been enacted in other jurisdictions, for instance:

• New York (N.Y. Gen. Bus. § 391-U): The New York Attorney General has enforcement authority, and violations of the law are subject to injunctive relief, consumer restitution, and monetary fines.

• Vermont (9 V.S.A. chapter 139 & 9 V.S.A. chapter 63): Under the Public Accommodations Act (PCA), if a violation is found, the Vermont Human Rights Commission may seek, among other relief, a $10,000 penalty for each violation of the act. A violation of the PCA is also a crime under Vermont law, and therefore a violation may result in a charged misdemeanor and a monetary fine, not more than $1,000. Separately, the Vermont Attorney General may sue for violation of gender-based price discrimination under the Vermont Consumer Protection Act, and can seek, among other things, a $10,000 penalty for each violation.

As such, this consumer alert signals that other states have the authority to prosecute, and are also actively monitoring, potential violations. There is also a continued risk of liability through potential class actions under state consumer protections laws, which can result in class action settlements of millions of dollars. Indeed, it is also likely that should the violation be publicized, the risk of a subsequent lawsuit or enforcement action will significantly increase.

To deal with this increased risk of liability, companies should proactively review their pricing schemes, particularly for types of consumer goods – such as toys and personal care products – that are more commonly marketed to specific genders. However, it is important to note that this law does not prohibit price differences in goods and services which are specifically based on the amount of time or difficulty to manufacture, the labor or materials used in manufacturing, or any other gender-neutral reason. As such, if a company identifies a pricing differential on similar goods that they sell, they should also investigate whether there is a reason for the increased price outside of gender. If the identified good does not fall within one of the protected exceptions, the company should amend the pricing structure on that product as soon as possible to reduce risk of liability.

Authored by Jason Downs, Trent Norris, and Ashley Gomez.