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Consumer deep dive: Understanding drip pricing under the DMCC
Consumer deep dive: Understanding drip pricing under the DMCC
16 June 2025
Series
Blogs
16 June 2025
The Competition and Markets Authority (CMA) now has direct enforcement powers in consumer protection law under the Digital Markets Competition and Consumers Act (DMCC Act). In the first part of our series of consumer deep dives, we explored the new rules on unfair commercial practices. In the second part, we considered fake reviews. In this third part, we will focus on drip pricing, including taking a closer look at this “new” prohibition, the CMA’s guidance and enforcement priorities, and compliance tips for businesses.
The DMCC Act contains a number of provisions to protect consumers from unfair trading and replaces the Consumer Protection from Unfair Trading Regulations 2008 (CPUTRs). The new rules, which have applied since 6 April 2025, maintain much of the scope and effect of the CPUTRS, but also introduce some new prohibitions for specific practices, such as drip pricing.
In essence, drip pricing refers to practices whereby mandatory charges are hidden from a consumer at the outset of a transactional journey, and only made clear at a later stage - for example a mandatory administration or booking charge that appears at the point of purchase, but which was not apparent in the headline price. While the prohibition on drip pricing is “new" in theory, the CMA has previously taken action against hidden charges under the pre-existing consumer law provisions outlawing the provision of misleading information. The introduction of a specific prohibition therefore effectively codifies recent CMA decisional practice (such as investigations into car rental intermediaries and hotel booking websites) and as such, many businesses will already have considered potential compliance issues. The DMCC Act, however, raises the stakes of non-compliance significantly, with the introduction of penalties of up to 10% global turnover, making compliance with consumer protection rules increasingly a board issue, for many businesses, for the first time.
Drip pricing is a banned practice under the DMCC Act and is therefore unfair in all circumstances, regardless of any impact on the consumer. Under the new rules, businesses must ensure that headline prices include all fixed mandatory charges, and that consumers are able to estimate variable charges in an invitation to purchase.
An invitation to purchase is any commercial practice involving the provision of information to a consumer which indicates the characteristics of a product and its price and which enables the consumer to decide whether to purchase the product or take another transactional decision in relation to the product. For more on “transactional decisions” see our previous post.
Where a customer cannot purchase a product without the payment of a fee, tax, charge or other payment, then that charge is mandatory and must be included in the product’s headline price. This is to be distinguished from optional additional services, which do not have to be included in the headline price provided that they are truly “optional” and are not a prerequisite for purchase. A CMA response to its earlier consultation on improving price transparency and product information for consumers indicated, for example, that the decision to select a seat on a plane was not “optional” for parents of young children, who – like it or not – need to sit with their infants (thus implying that seat charges must be included in headline ticket prices for such customers). This example has been dropped from more recent guidance, but the point still stands – businesses need to consider whether choices (and associated charges) are genuinely optional and whether this varies for certain categories of consumer.
If a purchase requires a certain mandatory charge, the charge must be presented clearly, in a timely manner and in a way that the consumer is likely to see it. The CMA provides examples such as a hotel rate which is advertised as £100 but which in fact, after offering multiple pages of optional add-ons, reveals a mandatory ‘weekend surcharge’ at the final step of booking – which would be prohibited under the new rules.
Where, owing to the nature of the product, the price (or a part of it) cannot be reasonably calculated in advance, the invitation to purchase must include information that enables the consumer to calculate the noncalculable (parts of the) price. That information must be provided with as much prominence as the part of the total price that is calculable in advance (i.e. the headline price), which will be discussed further below.
The CMA’s guidance on unfair commercial practices provides a number of examples of pricing practices that would be unlawful, such as the omission of a description of a product’s main characteristics (including, for example, whether the stated price is for a basic model).
However, questions remain about the approach that companies are expected to take in more nuanced situations, for example, where a mandatory delivery charge cannot reasonably be calculated in advance due to a number of factors, including the location of the customer. In response to significant feedback from businesses in response to its draft guidance earlier this year, the CMA has confirmed that:
The CMA has also indicated that it will continue to prioritise sectors that represent “essential spend” for consumers, so businesses providing essential consumer goods should take time to consider their compliance with consumer protection rules more generally. When making prioritisation decisions, the CMA will also take into account factors such as the number of consumers that the practices are likely to impact, as well as any impact on vulnerable consumers; and whether its actions may benefit “competitive and fair-dealing” businesses who deserve to operate on a level playing field.
The unfair commercial practice provisions apply to the ‘commercial practices’ that businesses, referred to in the UCP provisions as ‘traders’, have with consumers. Notably, therefore, the UCP provisions do not apply to purely “business-to-business” (B2B) practices.
While the CMA has made clear that certain more nuanced aspects of drip pricing (e.g. periodic fixed term contracts) will not be the subject of enforcement action until it has published its final guidance on the subject, aspects of drip pricing which are covered in the current guidance may be subject to investigation and enforcement action. Businesses should therefore: