‘Drip pricing’ lands AA driving schools with £4.2 million fine as CMA makes use of its consumer enforcement powers

Earlier today, the CMA announced that it has fined the AA and BSM driving schools (both of which are owned by the AA) the sum of £4.2 million for drip pricing. It also ordered them to refund learner drivers over £760,000. This marks the first use of the CMA’s direct enforcement powers to impose a fine for a substantive breach of consumer protection law and secure redress for consumers.

Drip pricing involves presenting an initial headline price which does not include all mandatory charges, which are only revealed later in the purchase process. In the case of the AA and BSM driving schools, the drip pricing took the form of a £3 booking fee which was not included in the headline price. According to the Department for Business and Trade, such practices are widespread: a 2023 study found that 46% of online businesses used at least one drip fee, with an estimated costs to UK consumers of anywhere between £595 million to £3.5 billion each year.

Drip pricing is an offence under the DMCCA, which came into force last year. However, for many years it has been prohibited by the CAP and BCAP Codes which are enforced by the UK’s advertising industry regulator, the ASA.

What did the CMA find?

The CMA began investigating the driving schools last November as part of its initial raft of DMCCA consumer enforcement cases. It found that:

• Over 80,000 learner drivers were shown prices that excluded a mandatory booking fee.
• The full price only became clear at checkout, after customers had already selected lessons, time slots and entered personal details.
• Returning customers were shown the booking fee separately, with it only incorporated into the total price at checkout.

What are the consequences?

The CMA ordered:

• A £4.2 million fine, reduced from £7 million following a 40% settlement discount for early admission and an agreement not to appeal. This highlights the benefits of early engagement with the regulator. The investigation concluded within four months, with the AA avoiding an estimated £2.8 million in higher penalties.
• More than £760,000 in refunds to affected learners, averaging ~£9 per customer, which must be issued automatically.

What does this mean for businesses?

This latest development shows that the CMA is ready and willing to exercise its DMCCA consumer enforcement powers, both to secure consumer redress and impose financial penalties.

We can expect this to continue, with a further 12 live consumer cases already underway and more on the horizon. Over the coming months, the CMA has indicated it will focus on more egregious practices including:

• Drip pricing and pressure selling
• Fake and misleading reviews
• Unfair exit charges including in subscription contracts
• Aggressive sales practices targeting vulnerable consumers
• Providing consumers with objectively false information

The focus will also be on areas of essential consumer spend, reflected in comments from CMA Chief Executive Sarah Cardell, who noted that consumers “deserve clarity” in important, high-cost decisions such as learning to drive.

If you’d like to understand the UK’s consumer protection regime and how to ensure your practices are lawful, or if you need guidance through a CMA investigation, you can find our more information on our expertise by visiting our dedicated consumer law hub which is here.