With its new strengthened consumer law powers effective from 6 April 2025, the Competition and Markets Authority (the CMA) intends to focus its early enforcement action on more egregious practices that clearly infringe the law, including "drip pricing".

With the risk of substantial fines of up to 10% of their global turnover, businesses should act now to ensure that their pricing practices comply with the CMA's latest guidance published on 4 April 2025.

What is drip pricing?

Drip pricing occurs when consumers are shown an initial price for a product or service and additional mandatory fees are introduced or "dripped" later in the checkout process. Consumers are "baited" into choosing a product because of the low base price but must pay a higher price to complete the purchase because they do not become aware of the hidden fees until later.

Research undertaken by the Department for Business and Trade in 2023 suggests that drip pricing is a common strategy used by online providers in certain sectors, including amongst the entertainment, hospitality, retail, transport and communication sectors.

Consumer enforcement in this area is not new. Drip pricing practices prohibited under the old consumer law were the subject of several consumer law enforcement cases, including airlines charging additional card payment fees that were not included in the headline price and car hire quotes that did not include fuel surcharges, out-of-hours pick up charges and young driver fees.

Phased approach to enforcement

Drip pricing is one of the areas where the CMA received the most substantive feedback in response to its initial consultation on unfair consumer practices. Following that process, the CMA announced a phased approach to enforcement and signalled that further consultation will take place in summer 2025 on the aspects of the drip pricing guidance that created most uncertainty, such as fixed-term periodic contracts. Specific drip pricing guidance is expected to be published in autumn 2025.

As previously reported, the Digital Markets, Competition and Consumers Act 2024 (the DMCCA) gives the CMA the power to take direct action against drip pricing (and other unfair) practices. Despite the phased approach to drip pricing enforcement, the CMA has indicated that it may take enforcement action over the coming year in relation to the type of drip pricing practices that were already prohibited under the old consumer law. The CMA has released guidance on what this means and how businesses can comply.

In the first phase (from 6 April 2025), the CMA will only take enforcement action against drip pricing which results in genuinely unexpected and untrailed charges being added on at checkout that clearly breach the new law as set out in the April 2025 guidance.

Key takeaways from the guidance

• Consumers should be given the key information they need to make an informed transactional decision.
• The prohibition on drip pricing applies to all stages of the consumer journey, including the advertising stage.
• Businesses must tell consumers the total price of the product, including any fees, taxes, charges or other payments that the consumer must pay to buy the product.
• Businesses must disclose optional delivery/postal charges or set out that such charges may apply when the charges cannot be calculated in advance.
• For mandatory charges that cannot be calculated in advance, businesses must clearly set out how the charges will be calculated with equal prominence to the headline price, enabling consumers to work out these additional costs themselves.

Mandatory v. optional charges

If a consumer cannot purchase a product without the payment of a charge, then that charge is mandatory and needs to be included in the headline price.

A business may wish to offer an optional service in addition to the product being sold. If a charge is genuinely optional, then it does not need to be included in the headline price. However, merely presenting a charge separately to the headline charge or describing it as a service does not make it optional. The CMA gave the following examples of lawfully provided optional charges:

• the option to pay for breakfast in a "room only" rate at a hotel; and
• the option to pay for an extended warranty when purchasing a television.

As these are genuinely optional, in that consumers can decide not to pay for them whilst still purchasing the original product, they do not need to be included within the headline price.

Examples of drip pricing

In contrast, the guidance provides the following examples of prohibited drip pricing – failure to include in the headline price:

• a "weekend surcharge" when a consumer inputs the dates of their two-night weekend stay into a hotel's website;
• an "enrolment fee" to access course content, which is separate to the cost of the course;
• an additional "long hair" fee where the pricing list does not indicate that different lengths of hair are charged at different prices; and
• a "pick-up" fee to collect a car from a car hire company, which is separate to the cost of hiring a car.

These charges all have to be paid in order to purchase the original product and so they are mandatory charges and must be included in the headline price.

What can businesses do to ensure compliance?

Businesses should test consumer journeys to ensure that sales processes comply with the new guidance, including:

• considering whether a charge is mandatory or genuinely optional;
• ensuring all mandatory charges are included in the headline price;
• if a mandatory charge cannot be calculated in advance, setting out how the charge will be calculated; and
• setting out optional delivery charges or stating that charges may occur (if they cannot be calculated ahead of checkout).

Please contact a member of the Dentons team if you would like to discuss drip pricing or any of the other changes to UK consumer law.