How to prepare for new changes to consumer law – drip pricing

The DMCCA came into force on 1 January 2025. It has replaced the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and amended certain parts of the Consumer Rights Act 2015 and the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (CCRs). In this series we’ll be looking at key sections of the Act coming into force from 1 April 2025, and what this means in practice for businesses and charities.

As discussed in our previous series, the DMCCA aims to provide further protections for consumers from unfair commercial practices, by prohibiting the use and promotion of them.

In addition to the changes discussed in our previous series (relating to the new subscription regime and the ban on fake consumer reviews) the government has decided to deem “drip pricing” an unfair commercial practice under the DMCCA, to meet the growing demand for greater pricing transparency for consumer goods and services.

What is drip pricing?

“Drip pricing”, is a common practice where traders choose to show consumers an initial price for products and later add further mandatory charges.

A recent report from the Department for Business and Trade uncovered that almost 50% of online providers include at least one dripped fee as part of their checkout process, despite current consumer protection legislation. Consumers most often encounter drip pricing for products that they purchase less frequently, such as flight or concert tickets, with cinema tickets, gym memberships, and postal services following closely behind. It is (conservatively) estimated that UK consumers are spending an additional £595 million to £3.5 billion online each year as a result of drip pricing. As a result of such complicated pricing mechanisms, customers are unable to accurately and easily compare the true price of goods and services.

New requirement for transparent pricing

From 1 April 2025, where a trader offers an “invitation to purchase” (being any invitation to a consumer to purchase goods or services), they must now provide the “total price of the product”, including any fees, taxes, charges or other payments that the consumer would incur by purchasing the product. An “invitation to purchase” covers the entire process leading up to a consumer making a purchase, not just immediately prior, meaning even providing a small amount of information about the price of a product (e.g. verbally as opposed to a formal quote) will need to meet this requirement.

The only exception will be where there are any mandatory fees associated with a product that are not fixed and can’t be calculated in advance, in which case, traders must specify how these variable fees (or the relevant part of it) will be calculated. The Guidance states that this information should not be displayed in smaller text but rather should have the exact same visibility as the headline price of a product.

Any fees previously presented as optional, which in fact are nearly essential for the product or service to function as expected (e.g. installation fees for a technical product or delivery fees where there is no option to collect a product in store) must also be included in the headline price of a product. Whilst genuinely optional fees (e.g. airline seat upgrades) are not addressed in the current DMCCA, the Government is expected to release further commentary on whether additional regulation will be needed for these in time.

Enforcement powers

The Guidance under the Act makes it clear the use of drip pricing will be automatically considered unfair in all circumstances.

The CMA has stronger enforcement persons under the DMCCA, with the ability to investigate if they suspect that an entity has engaged in an infringing practice, encouraging others to come forward if they have also experienced unlawful practices. If proven to be non-compliant, the CMA can fine the entity £30,000 or, if higher, 10% of the company’s turnover.

What does this mean for businesses?

If you are a business or organisation that is already committed to transparent pricing practices, this new prohibition effective from 1 April 2025, will help level the playing field, by ensuring your competitors are required to do the same.

All businesses offering goods or services to consumers, will now need to indicate the full price of goods and services upfront in the invitation to purchase or transaction process. This will include all mandatory fees, charges such as delivery and booking fees, and any applicable taxes. Where a monthly membership is being offered, the total price for the contract term will need to be indicated in addition to the monthly cost (e.g. it is no longer sufficient to just say £10 per month where the contract term is a minimum of 6 months, instead you must also include the total price of £60 in the headline).

Where it is not possible to reasonably calculate the price in advance, businesses will need to clearly evidence how the total price will be calculated in a way that allows the consumer to work out the total price. For example, this might apply to products sold by weight, length or where delivery charges vary depending on a consumer’s geographical location.

For any optional extras, where the consumer has no viable alternative (e.g. collection instead of delivery) or an ability to decline to purchase such an extra without affecting the value of the product being purchased, businesses must also include these costs in the headline price.

The Guidance also suggests that where it is genuinely not an option to provide the total price or all relevant information to calculate final price in the invitation to purchase, the consumer should be able to access this information in as few actions or clicks as possible.

How can we help you?

If the ban on drip pricing will impact your organisation, or if you’re unsure whether this will apply to you, feel free to get in touch. We can assist you to navigate any changes required to make sure your invitations to purchase are compliant with the new pricing transparency requirement (including any amendment of your template quotation or order forms).

The material in this article is provided for guidance and general information only and is not intended to constitute legal or other professional advice upon which you should rely. In particular, the information should not be used as a substitute for a full and proper consultation with a suitably qualified professional. Please do contact the Bates Wells team if you require further information.