Virgin Atlantic is facing a major investigation by the Competition & Markets Authority over concerns that customers were not shown the total price upfront when buying holidays, with many additional fees costing hundreds of pounds and significantly increasing the price of a holiday.
The investigations are part of a wider CMA clampdown on misleading pricing practices, including where mandatory charges are separated from the headline price – or added later in the buying process, known as drip pricing. These practices leave consumers facing unexpected costs or having to calculate the true cost themselves.
Such practices can also impact competition between businesses, as a firm using drip pricing may falsely appear to be cheaper than a competitor and attract more customers.
The CMA is also investigating Trainline and RED Driving School over the issue. For Trainline, the CMA observed transactions with fees ranging from £0.59 to £2.79. For coach bookings, it was a £1.50 booking fee. Both are costs that can add up for frequent travellers.
Meanwhile, RED Driving School is being investigated over how a mandatory booking fee and ‘digital’ fee have been displayed to people booking driving lessons. Specifically, whether these fees – £7+ per booking – have been included in the total upfront price.
All firms under investigation were sent ‘advisory letters’ as part of the CMA’s first consumer protection drive using its new enforcement powers. These letters put the businesses on notice and remind them of their obligations under consumer law, but the CMA says it remains concerned about their pricing practices following ongoing monitoring.
The CMA is at the beginning of its investigations and has reached no conclusions about whether these firms have broken the law. If it finds there has been an infringement of the law, the CMA can order businesses to pay compensation to affected customers, as well as fining companies up to 10% of global turnover.
CMA executive director for consumer protection Emma Cochrane said: “At a time when many households are watching every pound they spend, it is important that people are not surprised by extra fees when booking train and coach tickets, holidays or driving lessons.
“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. The first price customers see should be the price they pay.”
The investigations form part of the CMA’s wider work to help ease cost of living pressures. Since its strengthened consumer powers came into force – which allow it to fine companies for breaches and secure refunds – the CMA has launched investigations across ticketing, gyms, homeware, online reviews and air travel, securing more than £1.95m in refunds for UK consumers and levying fines close to £6.2m.
Driving schools AA and BSM and ticketing site StubHub UK have already received fines and will refund customers after being investigated over their use of drip pricing.
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