CMA drip pricing update

Trainline, Virgin Atlantic and RED Driving School investigated for drip pricing

Investigations into online pricing practices are part of CMA's work to help ease cost of living pressures.

·    CMA will examine if companies gave consumers the total price upfront

·    Firms previously put on notice by the CMA, but concerns remain about their practices

·    Consumers could get compensation if CMA finds the law has been broken

The Competition and Markets Authority (CMA) has launched 3 new consumer protection investigations into firms over concerns that customers were not shown the total price upfront when buying train and coach tickets, holidays or driving lessons.

The investigations are part of a wider CMA clampdown on misleading pricing practices, including where mandatory charges are separated from the headline price - or added later in the buying process, known as drip pricing. These practices leave consumers facing unexpected costs or having to calculate the true cost themselves.

Such practices can also impact competition between businesses, as a firm using drip pricing may falsely appear to be cheaper than a competitor and attract more customers.

CMA concerns

·      Trainline: being investigated over whether all mandatory fees have been included in the upfront prices displayed to consumers buying train and coach tickets in advance on the Trainline app and website. For train travel, the CMA observed transactions with fees ranging from £0.59 to £2.79. For coach bookings, it was a £1.50 booking fee. Both are costs that can add up for frequent travellers.

·      Virgin Atlantic: investigation will focus on whether mandatory resort fees and local taxes have been included in the upfront prices shown to customers buying package holidays. These fees vary but can cost hundreds of pounds and significantly increase the price of a holiday.

·      RED Driving School: being investigated over how a mandatory booking fee and 'digital' fee have been displayed to people booking driving lessons. Specifically, whether these fees - £7+ per booking - have been included in the total upfront price.

All firms under investigation were sent 'advisory letters' as part of the CMA's first consumer protection drive using its new enforcement powers. These letters put the businesses on notice and remind them of their obligations under consumer law, but the CMA remains concerned about their pricing practices following ongoing monitoring.

The CMA is at the beginning of its investigations and has reached no conclusions about whether these firms have broken the law. If it finds there has been an infringement of the law, the CMA can order businesses to pay compensation to affected customers, as well as fining companies up to 10% of global turnover. 

Emma Cochrane, Executive Director for Consumer Protection at the CMA, said:

"At a time when many households are watching every pound they spend, it is important that people are not surprised by extra fees when booking train and coach tickets, holidays or driving lessons.

"Clear pricing helps people compare offers confidently and choose the option that works best for them. Unexpected mandatory charges make this much harder, which is why the CMA initially put these firms on notice over concerns about their pricing practices and is now opening formal investigations.

"The first price customers see should be the price they pay."

CMA cost of living work

Today's investigations form part of the CMA's wider work to help ease cost of living pressures. Since its strengthened consumer powers came into force - which allow it to fine companies for breaches and secure refunds - the CMA has launched investigations across ticketing, gyms, homeware, online reviews and air travel, securing more than £1.95 million in refunds for UK consumers and levying fines close to £6.2 million. Driving schools AA and BSM and ticketing site StubHub UK have already received fines and will refund customers after being investigated over their use of drip pricing.

Alongside its enforcement action, the CMA launched a Clear Pricing campaign earlier this year, which provides businesses with a practical 3-step checklist to make sure their prices are clear and upfront - as well detailed guidance to help companies stay on the right side of the law. 

What happens next

The CMA will investigate how Trainline, Virgin Atlantic and RED Driving School presented mandatory fees. What happens next depends on the nature of the evidence. If the CMA finds that consumer law has been broken, it could order fines and refunds for consumers.

Visit the dedicated case pages to follow developments in these investigations: Trainline, Virgin Atlantic, RED Driving School.

Notes to Editor

1.   Media enquiries should be directed to [email protected] or 020 3738 6460. 

2.   As standard practice, the CMA does not name the companies it sends warning or advisory letters to. It may name them if it later opens enforcement cases against those firms.  

3.   The CMA will progress this investigation at pace, whilst ensuring a robust and detailed review is conducted, and the businesses' rights of defence are respected. There is no legal deadline by which consumer investigations must be completed under the Digital Markets, Competition and Consumers Act.