Lessons not included: Applying the brakes on the AA’s drip pricing practices

In previous articles, Saima Shabir and Benedict Wills have discussed the new enforcement regime under the Direct Markets, Competition and Consumers Act 2023 (DMCCA) and how the regime will affect consumer rights for years to come.

The DMCCA introduced new enforcement powers for the Competition and Markets Authority (CMA), who can now fine an organisation a substantial penalty of £300,000 or, if higher, 10% of its worldwide turnover for breaches involving unfair commercial practices and wider consumer law infringements. Although the figure will vary depending on the facts of an investigation, an organisation could be ordered to pay an enormous fine if it breaches consumer law.

It has been relatively quiet on whether the CMA will look to use the full reach of their enforcement powers… until recently.

Recently, the CMA announced they have ordered Automobile Association Developments Limited (the ‘AA’) to refund thousands of learner drivers and pay £4.2 million over the unfair practice of drip pricing.

What is drip pricing and why is it unfair

Drip pricing is a sales practice where a business advertises an initial price for a product or service but then adds mandatory charges later in the purchasing process. This means the total price for the goods and/or services are only truly revealed once the customer is at the checkout, ready to complete their purchase. Typical examples of drip pricing include:

• booking fees;
• taxes; and
• unavoidable processing fees.

Drip pricing is considered one of the clearest examples of unfair commercial practices for a multitude of reasons… the most obvious, is that it distorts consumer decision-making. Omitting material which could influence a consumer’s decision to purchase is inherently misleading and encourages consumers to engage with an offer they may have otherwise rejected.

Drip pricing also undermines effective competition. If one organisation is creating a false impression that they are cheaper than a competitor by adding fees onto a price at the checkout, the competitor’s business that are presenting transparent prices, will be disadvantaged and could miss out on potential customers.

Because of these reasons, drip pricing is no longer governed under the misleading omissions rules and the DMCCA has expressly made the practice of drip pricing expressly prohibited. This means that:

• harm to consumers no longer needs to be proven; and
• intention to mislead consumers is no longer a requirement to be in breach of the legislation.

The AA investigation

The CMA launched a major investigation into 8 businesses in November 2025, focusing on pricing tactics. Two of the businesses that were investigated, were the AA Driving School, and BSM Driving School. The investigation found that learner drivers, who booked driving lessons through the AA or BSM websites, were not shown mandatory booking fees at the time of advertisement. This meant that customers were only shown the full price at checkout, once they had already input personal details and effectively had committed to the purchase.

As mentioned above, this practice is known as drip pricing and is prohibited under the DMCCA. It was discovered in the investigation, that almost 80,000 customers were affected. The CMA held that the AA must refund the affected customers, totalling almost £760,000 and pay a fine of £4.6 million.

This is the first financial penalty that the CMA has imposed post investigation, and a clear sign to businesses and consumers they fully intend on enforcing the new legislation. Further to the financial penalties, the obligation to contact affected customers is also on the AA, they must write to each customer notifying them that they will receive a refund, adding an administrative burden to the penalty received.

Practical steps

There are a number of steps you should consider taking to avoid a breach of the new DMCCA rules and, avoid being fined by the CMA:

• review how your prices are presented at every stage of the customer journey and assess whether any consumer-facing contracts contain unfair terms;
• ensure all mandatory fees are clear, and shown upfront;
• test your own online sales process; and
• respond quickly and diligently to the CMA if any correspondence is received.

If you are unsure of the rules under the new legislation, need advice on unfair commercial practices, unfair terms, or are seeking assistance with your pricing practices, please contact our Commercial team.