Fix the dripping taps and tell consumers how much it costs, regulator says

“Drip pricing” means showing customers an initial price, then adding on unavoidable extra charges during the purchase process before they finalise their transaction. Since 6 April, this practice is now explicitly banned under the Digital Markets, Competition and Consumers Act 2024 (the “DMCCA”).

The Competition and Markets Authority (CMA) has published detailed guidance to help businesses understand their obligations. This clarity should minimise the compliance burden on businesses. Key points to be aware of from the guidance, in relation to drip pricing, are set out below:

• Specific information must be included in an “invitation to purchase” a product. An invitation to purchase is essentially anything which indicates what the trader is selling and the price, even where these references are minimal. An invitation to purchase is likely to made to the consumer several times during the sales process. Each time, as part of this required information, consumers must be given the total price, including any fees, taxes, charges or other unavoidable payments. 
• Where charges can't reasonably be calculated in advance of the invitation to purchase, businesses must inform consumers of how these charges will be calculated. This must be equally as prominent as the headline price which has already been calculated. Ultimately, consumers must be able to calculate the total price they'll need to pay.
• Each time a consumer is shown an invitation to purchase, the required information (including pricing) must be presented in a clear and timely manner. Information can be presented in different formats depending on the medium used, but businesses need to ensure information is always placed so that consumers are likely to see it.
• Genuinely optional charges aren't covered by these rules. However, simply presenting a charge as separate to the headline price eg a mandatory service or booking fee, doesn't make it optional. 
• The guidance in this area provided by the CMA is relatively limited and focuses on mainly clear-cut examples where the law was already clear. It's significantly shorter than the draft guidance that was published in December 2024, and the CMA has said that it'll consult further in the summer on those parts of the draft guidance that created more uncertainty, including fixed term periodic contracts charges. Updated guidance in this area is then set to be published in the autumn.

How will the CMA enforce the rules on drip pricing?

The CMA now has the power to enforce rules directly. Business that are found to be in breach of the rules risk being fined up to 10% of their annual turnover. The CMA have made it clear that their priorities for the first year of the DMCCA’s implementation will be the practices which cause the most harm to consumers and clearly breach the law. This includes the practice of hiding fees until consumers are just about to make a purchase, where there's a clear breach of the rules in line with the current guidance. However, the CMA has also acknowledged that enforcement won't be pursued for other potential breaches which are less clear-cut until the revised guidance is produced.  

What do the new regulations mean for businesses in practice?

• Given that the new drip pricing rules are now in force, businesses should be checking their compliance, if they haven't done so already.
• Businesses should review their invitations to purchase, and update them if needed. Consumers may be presented with these in marketing materials, as well as on the website itself. Each time a consumer is shown an invitation to purchase, this must be compliant with the rules – even if it's at an early stage such as advertising. 
• Businesses should ensure internal systems are put in place or updated to maintain compliance. Training should be provided to relevant staff to ensure they are aware of the new rules.

Please do get in touch with our expert regulatory lawyers, Katrina Anderson and Paul Hilder, if you'd like to speak about what the new DMCCA rules mean for you in practice.

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