The Competition and Markets Authority (CMA) has ordered the owner of AA and BSM driving schools to refund more than 80,000 learner drivers after an investigation revealed they failed to disclose mandatory booking fees upfront during online bookings.
Affected customers will receive a share of £760,000, averaging approximately £9 per person. Additionally, Automobile Association Developments has been fined £4.2 million for violating consumer protection laws through a practice known as "drip pricing."
"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 CMA chief executive Sarah Cardell. "At a time when people are watching every pound, dripped fees can tip the balance."
The investigation found that between April and December of last year, customers booking lessons online were initially shown prices that excluded a mandatory £3 booking fee. This fee was only revealed at the checkout stage after customers had selected lessons, chosen times, and entered personal details.
A spokesperson for AA and BSM driving schools expressed disappointment with the outcome but acknowledged the issue: "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. We are now refunding all relevant customers."
The AA received a 40% reduction on its penalty for admitting to breaking the law and agreeing to settle the case early. Affected customers will receive full refunds of booking fees without needing to take any action, as the driving schools will contact them directly.
This case marks the first penalty imposed by the CMA using new enforcement powers granted under the Digital Markets, Competition and Consumers Act 2024, which allows the watchdog to determine consumer law violations without going through courts.
Industry experts have highlighted broader implications. Matt Crole-Rees, motoring expert at Confused.com, noted: "While the £9 average payout might seem low, it still reflects a wider issue and could help drive better standards across the industry."
Katrina Anderson, principal associate at law firm Mills & Reeve, warned: "The CMA's strengthened powers are materially raising the stakes for businesses that fall short of consumer law. At a time when trust and loyalty are central to commercial growth, businesses cannot afford to get this wrong. The consequences go well beyond fines and customer refunds; the reputational damage can be just as significant."
The CMA's action comes amid a wider review of price transparency across hundreds of businesses in sectors including holidays, travel, shopping, deliveries, and live events. Government research from 2023 indicated that nearly half of sampled online businesses use hidden or dripped fees.
Rocio Concha, director of policy and advocacy at consumer group Which?, welcomed the enforcement: "This must be the start of a wider crackdown, and the regulator should continue to use its new powers to send a clear message to businesses that they will not get away with using illegal pricing tactics."