CMA issues first fine for breach of consumer law under the DMCC Act in drip pricing case

In a landmark enforcement action, the Competition and Markets Authority (CMA) has imposed its first financial penalty for a breach of consumer law using its new direct consumer enforcement powers under the Digital Markets, Competition and Consumers Act 2024 (DMCC Act), just five months after formally opening the case.

AA Driving School and BSM Driving School (both owned by the AA) have been ordered to pay a £4.2million fine and more than £760,000 in refunds to over 80,000 learner drivers for engaging in unlawful drip pricing. This is the first direct penalty imposed by the CMA for a breach of consumer protection law since the new consumer enforcement regime came into force on 6 April 2025. The decision provides an early indication of how the CMA intends to use its enhanced enforcement toolkit and reinforces its long-standing focus on price transparency, particularly in online consumer journeys.

What happened

AA Driving School and BSM Driving School, both owned by the AA, were found to have breached the DMCC Act by engaging in drip pricing in their online booking processes for driving lessons.

Between April and December 2025, customers were initially shown prices that did not include a mandatory £3 booking fee. For new customers, the fee only appeared at checkout, after lesson times had been selected and personal details entered. For returning customers, the fee was shown separately from the initial price and was only incorporated into the total price on a subsequent page. This practice is now prohibited under the DMCC Act, with businesses required to show the total price (inclusive of all mandatory fees) at the outset. In its public response, the AA stated: "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."

Ordering businesses to provide compensatory redress to consumers is one of a number of remedies available to the CMA (in addition to turnover-based penalties).  This is exp ected to become a common feature of consumer enforcement cases as it allows the CMA to demonstrate that it’s working hard to put money back in consumers’ pockets.

Affected customers will not need to take any action to receive their compensation. The administrative burden lies entirely with AA Driving School and BSM, who are required to determine and contact each affected customer and ensure refunds are issued either via card or cheque. The AA is likely to face considerable administrative costs in issuing these refunds, with the average payout expected to be around £9.

The penalty, and what it could have been

The combined value of the fine and compensation brings the total financial impact of the decision to almost £5million.

However, this could have been considerably more, with the AA benefitting from a £2.8million settlement discount (amounting to 40%), illustrating the material benefit in cooperating with the CMA at an early stage of its investigation – particularly in drip pricing cases like this where the law does not require the CMA to show that the practice would have impacted the average consumer, meaning the evidential burden on the CMA is low. The original fine (pre-discount) was set at £7million.

Under the DMCC Act, businesses found to have breached consumer protection law may be fined up to 10% of their worldwide annual turnover. As this case shows us, even where the underlying issue relates to a relatively modest per-transaction fee, the potential financial exposure under the new regime can be substantial.

Settlement, and why timing matters

The AA received the maximum available 40% reduction to its penalty by admitting the infringement and agreeing to settle the case at an early stage of the CMA's investigation, saving the CMA significant procedural costs.

Under the DMCC Act's direct enforcement regime, a party under investigation may settle with the CMA and receive a penalty reduction if it admits the infringement, agrees to take steps to stop or mitigate it, agrees to pay a penalty, accepts a streamlined administrative procedure for the remainder of the investigation, and agrees not to appeal or otherwise challenge any matter set out in the Final Infringement Notice.

The level of discount available depends on the stage at which settlement is reached. A reduction of up to 40% may be available where the party agrees to the Terms for Settlement Discussions before the CMA issues a Provisional Infringement Notice (PIN). Where settlement discussions begin only after a PIN has been issued, the maximum available discount is reduced to 25%. Any discount is conditional: if a settling party fails to comply with the Settlement Discount Conditions after signing the letter of acceptance, the CMA will withdraw the discount and require payment of the full penalty.

What the drip pricing rules require

Drip pricing - the practice of presenting an initial headline price and subsequently introducing additional mandatory charges as a consumer proceeds through a purchase - has been an enforcement priority for the CMA and is now expressly prohibited under the DMCC Act's updated price transparency rules. In practical terms, the rules require the following:

• Prices must be clear, complete and accurate. Traders must provide the total price upfront in all invitations to purchase, enabling consumers to make informed decisions and to compare products and services on a like-for-like basis.
• Mandatory charges must be included from the outset. A charge is mandatory where a consumer must pay it to purchase the product - this includes booking fees, delivery charges and other unavoidable payments. Presenting mandatory charges separately will not normally be sufficient to comply with the law.
• The rules apply from the very first price a consumer sees. This includes prices shown in online advertisements, emails and webpages - not only at the point of checkout.

The CMA was able to conclude this case extremely quickly, within five months of the case being announced publicly back in November 2025. While there will inevitably be more complex, slow moving consumer cases, this indicates how quickly the CMA can bring price transparency cases. Under the new DMCC Act rules governing material omissions from an invitation to purchase, the CMA does not have to demonstrate that the average consumer’s decision making would have been impacted by the practice. This can make non-compliance relatively easy to evidence (for example, with screenshots of the customer journey).

What this means for businesses

This decision is significant and demonstrates the CMA's willingness to use its direct fining and redress powers for breaches of consumer law. The key takeaways for businesses are:

• Review your pricing structures and online purchasing flows. Where a mandatory charge appears anywhere other than in the first price presented to the consumer, there may be a compliance issue to address - now backed by materially enhanced enforcement risk.
• Early engagement with the CMA can materially reduce financial exposure. While settlement clearly won’t be appropriate in all cases, the AA's 40% penalty reduction demonstrates the potential benefits of settling early. Businesses that engage promptly and constructively with the CMA are likely to be able to meaningfully reduce any penalty.
• There is more to come from the CMA. This case forms part of a broader enforcement drive launched in November 2025, which opened investigations into eight businesses including AA Driving School and BSM Driving School. Investigations into secondary ticketing platforms StubHub and Viagogo, Gold's Gym, and retailers Wayfair, Appliances Direct and Marks Electrical remain ongoing.

How we can help

TLT's competition and consumer law team advises businesses across a wide range of sectors on compliance with the CMA's consumer protection regime, including the DMCC Act's price transparency requirements, and on managing CMA investigations. If you would like to discuss what this decision may mean for your business, please get in touch.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at April 2026. Specific advice should be sought for specific cases. For more information see our terms & conditions.