The UK’s competition watchdog has launched investigations into Trainline, Virgin Atlantic and Red Driving School over concerns that all three companies displayed misleadingly low prices to their customers.
The Competition and Markets Authority’s investigations are part of a broader clampdown on “drip pricing”, an illegal practice that makes a product appear cheaper by not including all mandatory fees.
The regulator said it had opened investigations into the companies amid concerns that customers had not been shown the total price upfront when buying train and coach tickets, holidays or driving lessons.
“The first price customers see should be the price they pay,” said Emma Cochrane, the executive director for consumer protection at the CMA. “Clear pricing helps people compare offers confidently and choose the option that works best for them.
“Unexpected mandatory charges make this much harder, which is why the CMA initially put these firms on notice over concerns about their pricing practices and is now opening formal investigations,” Cochrane added.
Trainline said in a statement to the stock exchange that it had “proactively engaged with the CMA over several months” and was “taking steps to enhance the presentation of certain fees”. Shares in the business, which is the only one of the three companies that is listed on the stock exchange, fell by as much as 14% in early trading on Wednesday.
Virgin Atlantic said that “mandatory fees are indicated at multiple stages” when customers are booking trips, but that it was reviewing the concerns and will cooperate with the regulator. Red Driving School was approached for comment.
The CMA’s investigations have been launched using its new consumer protection powers, which were granted last year. These powers allow the regulator to decide whether consumer laws have been broken, rather than having to go through the courts. If the CMA finds there has been an infringement of the law, it can order businesses to pay compensation to affected customers and can fine companies up to 10% of their global turnover.
Earlier this year the CMA ordered the ticket seller StubHub to pay out nearly £1.5m in customer refunds and penalties for drip pricing. It also fined the AA £4.2m and ordered it to repay more than £760,000 to learner drivers over drip pricing.
Andy Burnham has also promised to end “rip-off” business practices. Writing in the Guardian this month, the prime minister said his government would step in wherever it could as he seeks to put the cost of living at the heart of his premiership.