AA Driving Schools Hit with £4.2m Fine and Must Refund Thousands of Learners
Two major driving schools owned by the AA have been ordered to refund more than 80,000 customers and pay a substantial £4.2 million penalty by the UK competition watchdog. The Competition and Markets Authority (CMA) found that AA Driving School and BSM Driving School engaged in illegal "drip-pricing" by omitting a mandatory £3 booking fee from their advertised upfront prices.
Drip-Pricing Practice Deemed Illegal
The CMA investigation revealed that learner drivers were not shown the full cost of lessons initially, with the £3 booking fee only appearing at checkout. This practice meant consumers could not accurately compare prices or understand their total financial commitment before beginning the booking process.
Individual refunds will vary based on the number of lesson packages purchased, with the average customer receiving approximately £9 back. The total refund amount exceeds £760,000, bringing the combined refunds and penalty to nearly £5 million.
First Financial Penalty Under New Powers
This case marks the first financial penalty issued by the CMA for a breach of consumer law since it gained enhanced enforcement powers. CMA chief executive Sarah Cardell emphasized the significance of this action, stating: "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."
Cardell further explained: "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. With our new powers, it will never pay to break the law or treat consumers unfairly. Where the rules are ignored, we'll step in to put things right."
AA Response and Customer Refund Process
A spokesperson for AA driving schools responded: "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."
The spokesperson added: "We are now refunding all relevant customers. 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."
Affected customers do not need to take any action, according to the CMA. The AA Driving School or BSM Driving School will write to them stating that the money will be automatically refunded onto the card they used to pay for their lessons. If that is not possible, they will be sent a cheque instead.
Wider Context of Drip-Pricing in UK
This case occurs against a backdrop of widespread drip-pricing practices across British businesses. In 2023, the Department for Business and Trade found that nearly half of online businesses used dripped fees, with consumers spending up to £3.5 billion per year as a result of these hidden charges.
The CMA's decisive action against these prominent driving schools sends a strong message to all businesses that misleading pricing practices will not be tolerated, particularly when they affect essential services like learning to drive.
