For years, many online pricing practices existed in a grey area. Businesses often relied on booking fees, admin charges, delivery charges or mandatory extras being introduced later in the customer journey, particularly at checkout. Regulators and consumer groups alike raised concerns around these practices but it was only with the coming into force of the Digital Markets, Competition and Consumers Act 2024 (the Act) that the Competition and Markets Authority (the CMA) was given the power to take direct action against companies that were adopting such unfair commercial practices
And now it has.
In the first use of its new powers, in bringing enforcement action against the AA and BSM driving schools, the CMA has put down a marker and given the clearest indication yet that UK consumer protection law is entering a much more aggressive phase. The case demonstrates not only the regulator’s growing willingness to intervene, but also the significant financial and reputational consequences businesses may face if they fail to properly understand their obligations under consumer protection law.
If you’re a business operating online or selling directly to consumers, you can’t ignore the implications. You must demonstrate full transparency in your pricing.
Let’s explore the issue in more detail.
The AA and BSM case explained
The case centred around the way driving lesson prices were advertised online by the AA and BSM (which is owned by the AA).
The CMA found that both businesses displayed headline lesson prices that excluded a mandatory booking fee, with the additional charge only becoming visible later in the booking process. In practice, customers couldn’t avoid paying the fee, meaning the advertised upfront price was not the true total price.
This is commonly referred to as “drip pricing”.
Following its investigation, the CMA concluded that the practice breached the Act because unavoidable charges must be included within the advertised price from the outset.
The result of this finding was significant for both the AA and BSM. The AA agreed to pay a financial penalty of £4.2 million and was required to provide refunds of over £760,000 to affected customers.
What’s important to understand is that the issue at the centre of this case was not a particularly large fee. The booking charge in question was only £3. The point is that, when applied across a large customer base, the scale of the issue and the CMA’s response became substantial.
What the case means for consumer protection law
The aftershocks of this case will extend well beyond driving schools.
Historically, the CMA could only pursue consumer protection breaches through the courts, which could result in lengthy investigations and slower enforcement action. The knock-on effect of this was that many businesses viewed consumer protection enforcement as a relatively low immediate risk compared to areas such as competition law or data protection, where the CMA and the Information Commissioner could fine businesses.
Under the new regime, the CMA now has direct enforcement powers, allowing it to:
- investigate alleged breaches directly
- determine whether consumer law has been infringed
- impose substantial financial penalties
- order compensation or refunds to consumers.
Businesses can now face penalties of up to 10% of global turnover for certain breaches.
The AA and BSM case signals how the regulator is likely to approach consumer protection enforcement moving forward.
What the change means for you and your business
The CMA has made it clear that where fees are mandatory, they should form part of the headline advertised price. Your business is expected to ensure that pricing information is clear, upfront and immediately understandable to your customers.
The implications extend beyond pricing alone. Regulators are also paying closer attention to all sorts of unfair commercial practices, including:
- subscription and auto-renewal models
- countdown timers and pressure-selling tactics
- hidden charges and optional extras
- misleading discounts or promotional claims
- unclear cancellation rights.
In effect, businesses are now operating in an environment where consumer-facing practices are likely to face far greater scrutiny than they did previously.
Why businesses need to understand their obligations
Consumer law represents a significant operational and financial risk area for businesses, particularly those operating online, in retail, hospitality, travel, subscriptions, memberships or other consumer-facing sectors.
You should also think beyond the implications of deliberately misleading conduct. Enforcement action could be brought on a broader range of issues. Practices that have historically been viewed as common or commercially acceptable may now attract regulatory scrutiny if they fail to meet modern transparency standards.
This means businesses should be reviewing:
- website pricing structures
- checkout journeys
- advertising and promotional materials
- subscription and renewal processes
- terms and conditions
- customer communications.
Your legal compliance practices can’t just be about the correct wording being buried within your terms and conditions. Regulators are increasingly focused on the overall customer experience and whether consumers are being presented with information clearly and fairly from the outset. This has to be the starting point going forward.
If you’re a director or part of a senior management team, you’ll also need to consider the reputational consequences enforcement could bring. High-profile enforcement action can quickly attract national media attention and damage consumer trust, even where the underlying issue may appear relatively small in isolation.
How Gorvins Solicitors can help
As consumer protection law continues to evolve, businesses should be taking measures to ensure they fully understand how the current rules apply to their operations, marketing and sales processes.
At Gorvins Solicitors, our commercial legal team supports businesses across a wide range of sectors with practical advice on regulatory compliance, consumer protection obligations and risk management.
Whether you’re reviewing customer journeys, updating terms and conditions, assessing marketing practices or responding to regulatory concerns, our team can help you understand your legal position and reduce the risk of future enforcement action.
Contact us today to get started. Call us on 0161 930 5151, email us at enquiries@gorvins.com or fill in the online form.