The UK's Competition and Markets Authority (CMA) has initiated consumer protection investigations into Trainline, Virgin Atlantic, and RED Driving School. These probes are part of a broader crackdown on 'drip pricing,' a practice where mandatory charges are separated from the headline price or added later in the buying process, leading to unexpected costs for consumers. The CMA's concern is that these companies are not displaying the full, final price upfront when customers purchase train/coach tickets, holidays, or driving lessons.
Specifically, Trainline is being investigated regarding mandatory fees ranging from $0.59 to $2.79 for train tickets and a $1.50 booking fee for coach tickets. Virgin Atlantic's investigation focuses on whether mandatory resort fees and local taxes, which can amount to hundreds of pounds, are included in the upfront prices for package holidays. RED Driving School is under scrutiny for how a mandatory booking fee and a 'digital' fee, totaling $7 or more per booking, are presented to customers.
The CMA's investigations are in their early stages, and no conclusions have been reached regarding whether these firms have broken the law. However, if infringements are found, the CMA has the power to order compensation for affected customers and impose fines of up to 10% of a company's global turnover. This action follows advisory letters sent to the businesses as part of the CMA's strengthened enforcement powers, which also allow it to fine companies for breaches and secure refunds.
Trainline's shares, being the only listed company among the three, saw a significant drop of nearly 17% to 202.4 pence following the announcement. All three companies have stated their commitment to transparency and have pledged to cooperate fully with the CMA's investigations. Trainline specifically mentioned proactive engagement with the CMA and steps to enhance how certain fees are presented.
This initiative by the CMA is part of its wider effort to address cost of living pressures and ensure clear pricing. The regulator emphasizes that the first price customers see should be the price they pay, enabling confident comparison shopping. Similar actions have been taken against other companies in the past, including AA, BSM, and StubHub UK, which received fines and were ordered to refund customers for similar practices.
