AA Driving School Fined £4.2m for Drip Pricing

The AA has become the first company to feel the sting of the Competition and Markets Authority’s new consumer enforcement powers, being fined £4.2 million and ordered to repay £760,000 to more than 80,000 learner drivers who were put off by so-called drip pricing.

The judge ruled that two of the car group’s arms, AA Driving School and BSM Driving School, failed to disclose all course costs when customers made online bookings, which is a legal requirement under a regime that came into effect last year. Instead, a mandatory booking fee of £3 has been quietly added to the shopping trip, leaving readers to find out the real value once they’re deep in the checkout process.

Sarah Cardell, chief executive of the CMA, was unequivocal in her decision. “If money is mandatory, the law is clear: it must be included in the price from the beginning, it can be included in the checkout, so that consumers always know what they need to pay,” he said.

The enforcement action is the first of its kind and sends a clear signal to British business that the regulator is ready to use its sharp teeth. From April 2025, the CMA has been able to investigate and punish breaches of consumer protection law directly, without going to court, a change that has been widely flagged as a potential game changer in the way SMEs and large companies alike present prices online.

Affected customers won’t need to lift a finger. Two driving schools will write to those who qualify and refund them automatically, either to the card that was originally used or, failing that, by check. Individual fees will depend on how many course packages each student has purchased, with the average refund coming in at around £9.

A spokesman for the AA Driving School wants to draw a line under the episode. “While the £3 booking fee is made clear to customers prior to purchase, we agree that it should have been shown at the start of the online booking process,” they said. “After listening to the regulator, we have made immediate changes to our website to make the £3 booking fee more visible. We are now refunding all eligible customers. Although we are disappointed by the outcome of the investigation, we are fully co-operating with the CMA throughout and can stress that protecting consumer rights has been an important part of our business for over 120 years.”

Drag pricing, the practice of advertising at a discounted rate and placing mandatory extras on the sales floor, has long been a bane of consumer champions. A 2023 study by the Department of Business and Trade found that almost half of online retailers use this tactic, taking an estimated £3.5 billion a year out of consumers’ pockets. For small and medium-sized businesses watching the AA issue unfold, the lesson is clear: what may have passed off as a marketing gimmick is now a regulatory triwire.

The decision also comes at a critical time for AA itself. Advisers were reportedly appointed late last year to explore a sale or stock market move for the group, five years on from its £219 million takeover deal struck by Warburg Pincus and TowerBrook Capital Partners. A public reprimand from the CMA is not as easy to polish the shop windows as the owners have been expecting as they suspect potential buyers.

Times are equally tough for Britain’s struggling student drivers. Figures from the Department for Transport show that the share of 17- to 20-year-olds in England with a full driving license has fallen from 37 per cent in 2018 to 29 per cent in 2024, with tuition costs cited as a major deterrent to getting behind the wheel. Advance students now face an average wait time of 22 weeks to test, compared to about five weeks in February 2020, before the pandemic improved the system.

In an industry that is already struggling with affordability and access, going public for invisible prices is an unwelcome highlight. To the wider business community, the message from Canary Wharf is unequivocal: the CMA has found its checkbook, and is no longer afraid to use it.