Driving school giant AA slapped with £4.2m penalty for 'drip pricing' as thousands await refunds

The regulator said the AA Driving School and BSM Driving School, which are both owned by Automobile Association Developments Limited, broke consumer law by failing to show the full price at the outset. The amount each customer receives will depend on how many lesson packages they purchased, although the average refund is expected to be around £9. TRENDING Stories Videos Your Say This is the first time the CMA has issued a financial penalty using its stronger enforcement powers under the Digital Markets, Competition and Consumers Act 2024. The investigation found that both driving schools used so-called drip pricing, a practice where additional charges are only revealed later in the purchasing process. Customers booking lessons between April and December 2025 were initially shown prices that did not include a compulsory £3 booking fee. This fee only became visible at a later stage, often at the point of payment. First-time customers only saw the true total after selecting lessons, choosing times and entering their personal details. Returning customers were shown the fee separately, but it was not fully included in the advertised price until the checkout stage.Consumer protection law requires that all unavoidable costs must be clearly included in the headline price from the beginning. By adding the fee later in the process, the companies gave a misleading impression of the true cost. The CMA's chief executive, Sarah Cardell, said: 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. She added that hidden fees can have a real impact on households already under financial pressure. She said: 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.Ms Cardell also warned that other companies could face similar action if they fail to follow the rules introduced by the regulator.LATEST DEVELOPMENTSMotorists at risk of prosecution as new rules target dangerous drivers ignoring roadworksRolls-Royce debuts 'landmark' electric convertible limited to just 100 orders - 'Our most ambitious work'Reform UK demands action from Rachel Reeves with 'emergency cut' to fuel prices - 'Do something NOW!'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, she said. The enforcement action forms part of a wider crackdown launched by the CMA in November 2025 into hidden online charges. Customers affected by the driving school charges do not need to take any action to receive their money back, the CMA stated.The AA will be responsible for contacting eligible learners directly, and refunds will be issued automatically to the original payment card. Where this is not possible, payments will be made by cheque. The AA cooperated with the investigation and admitted wrongdoing. As a result, the company secured a reduced fine, which was lowered from a potential £7million.Under the terms of the settlement, the company must also provide regular updates to the CMA on the progress of its refund programme over the next year. The case is being seen as a major test of the regulator's new powers and sends a clear signal that companies using hidden fees risk facing significant penalties. A spokesperson for AA driving schools told GB News: 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. We are now refunding all relevant customers. While we are disappointed with the outcome of the investigation, we have fully cooperated with the CMA throughout and would emphasise that protecting consumer rights has been central to our business for more than 120 years. Our Standards: The GB News Editorial Charter