Two AA-owned driving schools, AA Driving School and BSM Driving School, have been fined a total of £4.2 million and ordered to repay over 80,000 customers for the illegal practice of drip-pricing, in a landmark first use of the competition watchdog’s new powers.
The Competition and Markets Authority (CMA) found the schools advertised driving lesson packages without including a mandatory £3 booking fee in the upfront price, revealing it only later in the booking process. This will result in refunds totalling more than £760,000, with the average customer receiving around £9 back, depending on how many lessons they booked. The combined cost of the fine and refunds to The AA, which owns both schools, stands at nearly £5 million.
Why ‘drip-pricing’ is illegal
The case hinges on the practice of drip-pricing, now explicitly banned under the Digital Markets, Competition and Consumers Act (DMCCA) 2024. This involves advertising an initial price to attract customers, only to add unavoidable extra fees as they proceed to checkout. The CMA states this causes significant consumer detriment, leaving people paying more than they intended, hampering their ability to compare prices accurately, and creating a sense of being baited into a purchase.
Research has indicated the scale of the problem is vast, with drip pricing estimated to cost UK consumers an additional £595 million to £3.5 billion online each year. A 2023 study found nearly half of online providers used at least one dripped fee, with transport and communication sectors among the most frequent offenders.
Both schools involved have long histories in the UK. The British School of Motoring (BSM) was founded in 1910, making it one of the country’s oldest driving schools, and was acquired by The AA in February 2011. The AA launched its own driving school in 1992.
A new era of enforcement for the CMA
This penalty represents a major shift in how consumer law is policed in the UK. It is the first financial penalty the CMA has imposed for a breach of consumer law using the direct enforcement powers granted by the DMCCA, which came into full effect in April 2025. Previously, tackling practices like drip-pricing under older regulations was described as a difficult game of “whack-a-mole”.
The new regime allows the CMA to act as a prosecutor and judge, imposing administrative fines of up to 10% of a company’s global turnover without first going through the courts. The watchdog has said it will focus these powers on “egregious breaches” and areas where it has set clear precedent, with misleading online pricing a key priority.
While a fine against Euro Car Parks in February 2026 for procedural failures was the first issued under the CMA’s enhanced powers, this action against the AA-owned schools is the first substantive penalty for breaking consumer law. It signals the start of a wider crackdown; the CMA launched eight investigations into companies for misleading pricing practices, including drip-pricing, in November 2025 and has sent advisory letters to around 100 firms across various sectors.
