News

Drip pricing hit by CMA’s first penalty under direct enforcement powers

15 April 2026

In the first decision of its kind, the Competition and Markets Authority (“CMA”) has found that the Automobile Association (“AA”), which owns the AA Driving School and the BSM Driving School (“AA Driving Schools”), has breached UK consumer law through the use of drip pricing. The AA has been fined £4.2 million and is required to make refunds to customers exceeding £760,000, resulting in a total financial impact of nearly £5 million.

The CMA’s investigation and findings

In November 2025, the CMA announced eight investigations focused on online pricing tactics, including an investigation into the AA Driving Schools, as part of the first wave of enforcement activity using the CMA’s newly expanded consumer enforcement powers.

The CMA’s investigation into the AA Driving Schools has now concluded with a finding that customers booking lessons between April and December 2025 were not shown the total price up front, with a mandatory £3 booking fee revealed only at checkout.

This practice constitutes what is known as “drip pricing”, i.e. where an unavoidable fee is added later in the purchasing process and not included in the headline price advertised to consumers. This practice is expressly prohibited by the Digital Markets, Competition and Consumers Act 2024 to ensure that consumers are not misled into choosing a product or service on the basis of an initial price that does not reflect the total cost to be paid.

Sanctions and remedial steps

As a result of the CMA’s findings it has:

imposed a £4.2 million financial penalty on the AA; and
ordered the AA to issue refunds to more than 80,000 customers totalling over £760,000, with individual refunds varying depending on the number of lesson packages purchased. The AA is required to contact all affected customers and issue refunds proactively.

The penalty reflects a 40% discount in light of the AA’s admission of the infringement and its agreement to settle the case.

Implications and next steps

This case is notable for a number of firsts: it is the first time the CMA has used its new direct enforcement powers to make an infringement finding, the first time it has imposed a financial penalty for a substantive breach of consumer law, and the first time it has used its new powers to secure refunds for consumers.

It sends a clear signal that the CMA is prepared to make active use of its new powers and will not hesitate to intervene where it identifies non-compliant practices, in particular where it deems a breach to be egregious and where the breach affects a large number of UK consumers. The case also reinforces the CMA’s recent focus on pricing transparency as an enforcement priority, and demonstrates that even relatively small mandatory charges, if not disclosed up front, can expose businesses to regulatory scrutiny and significant financial consequences.

If you would like to discuss the implications of this decision, support with reviewing your pricing practices or advice on the CMA’s new enforcement regime, our UK Consumer Investigations team would be happy to assist.

Authored by Micaela Bostrom, Christopher Hutton, and Richard Welfare.