The CMA has opened investigations into 8 businesses that it has reason to suspect have infringed consumer law in relation to their use of fees, use of misleading time-limited offers and/or the practice of automatically opting consumers in for optional charges.
Two of the 8 firms – secondary ticketing sites StubHub and viagogo – are under review regarding the mandatory additional charges applied when consumers buy tickets – and whether or not these fees are included upfront.
The AA Driving School and BSM Driving School are being investigated over their presentation of mandatory fees on these sites. Specifically, whether these fees are included in the total price the consumer sees at the beginning of the purchase process.
Gold’s Gym is under investigation over its presentation of a one-off joining fee for its annual membership, and whether the way it presents this fee breaks the law – specifically, introducing it part way through the sign-up process and not including it in advertised membership costs.
Homeware retailers Wayfair, Appliances Direct, and Marks Electrical – are being investigated to determine whether their time-limited sales ended when they said they would, or whether customers are being automatically opted in to purchasing additional services. Specifically, the CMA is looking into the conduct of:
- Wayfair – in relation to time-limited sales
- Marks Electrical – in relation to default opt-ins
- Appliances Direct – in relation to time-limited sales and default opt-ins
At this stage, the CMA has reached no conclusions about whether the law has been broken in any of these investigations.
Advisory letters: Businesses told to review their practices
Based on the results of its compliance sweeps, the CMA is sending advisory letters to 100 businesses, outlining concerns about their use of additional fees and online sales tactics.
The letters target sectors where the CMA identified potential concerns, as well as key areas of spending, such as:
- holidays (including package travel)
- driving schools
- homeware retailers
- rail travel
- parking and airport parking
- bus and coach travel
- luggage storage providers
- cinemas
- live event tickets
- food and drink delivery companies
- letter and parcel delivery
- gyms and fitness
- fashion
- online vouchers
These sectors collectively serve tens of millions of UK consumers every year. From January to June alone, UK residents made over 44.7 million trips overseas, spending an estimated £38.6 billion. At home, 11.5 million people belong to a gym; almost a third of all British adults – 16.7 million people – order fast food for delivery once a month or more, and one in 10 UK consumers uses secondary ticketing sites – with 72% saying they have concerns about additional fees. The postal sectors also serve a huge quantity of the population, with 10.5 billion parcels and letters being delivered in 2023-2024.
What’s more, a report by DBT found that drip pricing was particularly prevalent regarding event tickets (93% of businesses reviewed), cinema tickets (69%), and gym memberships (60%) – all areas where the CMA has taken action today.
These letters put businesses on notice. They must now review their practices and ensure they are in line with the law – and the CMA’s pricing transparency guidance and unfair commercial practices guidance – to avoid the risk of future enforcement action.
The CMA will continue to engage with those businesses to ensure they take the steps needed to comply with the law – or otherwise face future enforcement action.
Guidance: Being transparent on prices
While the DMCCA has updated the law on pricing information, certain aspects of drip pricing have long been prohibited under existing consumer legislation.
Practices such as failing to include mandatory charges upfront, introducing unavoidable fees at checkout, and presenting misleading headline prices that exclude compulsory costs have been unlawful for years under the Consumer Protection from Unfair Trading Regulations 2008. This is why the CMA’s early enforcement action and advisory letters focus on possible breaches related to these issues.
Other elements of the law have only recently been updated, and the CMA has published its finalised price transparency guidance today, following consultation with businesses.
The CMA will be hosting a webinar for businesses on Wednesday 10 December, 3-4pm giving an overview of the new price transparency requirements and how to comply with them. Register here: https://connect.cma.gov.uk/webinar-price-transparency-guidance-for-businesses.
