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The UK Competition and Markets Authority has ordered the AA to pay almost £5mn in penalties and refunds over hidden fees for driving school customers, in the first financial sanction meted out by the agency under new consumer protection laws.
The CMA has fined the AA £4.2mn and ordered the company to refund learner drivers more than £760,000, after a £3 mandatory booking fee for lessons was not included in the upfront price, the antitrust watchdog said on Wednesday.
The investigation is part of a wider crackdown by the CMA on “drip pricing”, where a company advertises a lower initial price before introducing mandatory fees through the purchasing process. The agency opened an investigation into eight businesses, including the AA, in November over such pricing techniques.
“If a fee is mandatory, the law is clear, it must be included in the price from the very start — not added at checkout — so consumers always know what they need to pay,” said Sarah Cardell, CMA chief executive.
She added: “At a time when people are watching every pound, dripped fees can tip the balance. And when it comes to something as important — and costly — as learning to drive, people deserve clarity.”
The case is the first time the CMA has issued financial penalties using the new powers that came into force in April last year. The regulator is now able to decide whether consumer protection laws have been infringed and take action directly without litigating through the courts.
Dripped fees were estimated to cost consumers up to £3.5bn more in online purchases in 2023, according to UK government research, with almost half of online businesses using at least one dripped fee.
The penalties relate to the AA and BSM driving schools, which are both owned by the AA, with more than 80,000 customers expected to receive a refund of £9 on average.
The fine against the UK’s biggest roadside recovery business was reduced by 40 per cent after the company admitted to the practice and agreed to settle.
The AA driving schools said: “Although the £3 booking fee was made clear to customers prior to their purchase, we acknowledge it should have also been displayed at the start of the online booking journey . . . having listened to the regulator, we made immediate changes to our website to make the £3 booking fee more prominent.
“Whilst we are disappointed with the outcome of the investigation, we have fully co-operated with the CMA throughout and would emphasise that protecting consumer rights has been central to our business for more than 120 years.”
Additional reporting by Ashley Armstrong
