Michael Sheils McNameeBusiness reporter
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Investigations have been opened into eight companies, including ticket resellers and driving schools, by the UK’s competition regulator as part of a review of online pricing practices.
The cases are the first launched by the Competition and Markets Authority (CMA) under new consumer protection powers, and are looking at actions such as mandatory additional charges, time limited sales and automatic opt-ins.
The companies being investigated are StubHub, Viagogo, AA Driving School, BSM Driving School, Gold’s Gym, Wayfair, Appliances Direct and Marks Electrical.
The CMA is also writing to 100 businesses to outline its concern about their use of additional fees and sales tactics.
CMA chief executive Sarah Cardell said: “At a time when household budgets are under constant pressure and we’re all hunting for the best deal possible, it’s crucial that people are able to shop online with confidence, knowing that the price they see is the price they’ll pay, and any sales are genuine.”
The announcement comes after a major review which has been ongoing since April, looking at more than 400 businesses across the economy, to review whether rules on price transparency are being met.
Under the Digital Markets, Competition and Consumers Act introduced last year, the CMA has powers to tackle anti-competitive behaviour.
It can now decide if consumer laws have been broken – rather than having to go through the courts.
It can order businesses to pay compensation to affected customers, and fine companies up to 10% of global turnover.
The CMA has said it is looking into practices including pressure selling, drip pricing, and misleading countdown clocks as part of its investigations.
Drip pricing happens when shoppers are shown an initial price for an item or service on a website, only to find additional fees are revealed later in the checkout process.
The next updates in the investigations are due next March.
Rocio Concha, director of policy and advocacy at consumer group Which?, said it was “encouraging that the regulator is taking this action”.
“It shouldn’t hesitate to use its new consumer enforcement powers to fine any firms that have broken the rules.”
The 100 companies the CMA has contacted operate in a range of sectors, including holidays (including package travel), homeware retailers, rail travel, parking and airport parking, bus and coach travel, luggage storage providers, cinemas, live event tickets, food and drink delivery companies, letter and parcel delivery, gyms and fitness, fashion, and online vouchers.
These companies have been put “on notice” and are required to ensure they are in line with pricing guidance and guidelines on unfair commercial practice in order to avoid enforcement action.
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The CMA outlined the reasons for its investigation into the eight firms:
- StubHub and Viagogo are being investigated over whether consumers can see all the fees they will have to pay at the start of the purchase process – which could include things like taxes and booking fees
- AA Driving School and BSM Driving School are being investigated over their presentation of booking fees – and if they are displayed at the start of the purchasing process
- Gold’s Gym is under investigation for how it displays a one-off joining fee for its annual membership – and concerns about it introducing “it part way through the sign-up process and not including it in advertised membership costs”, the CMA said
- Wayfair is being investigated over whether time-limited sales ended when it said they would. Marks Electrical is being investigated over whether customers are automatically opted-in to additional services (things like the removal of old appliances and installation), and Appliances Direct is being investigated for both of these practices
Of the eight companies, the CMA stated that it had “reached no conclusions about whether the law has been broken in any of these investigations”.
Nick Glynne, the chief executive of Buy It Direct, the parent company for Appliances Direct, said his company had only been informed of the CMA’s investigation hours ahead of it being released to the media.
“We are one of the largest appliance retailers in the UK, selling over two million items each year. I am not aware of a single customer complaint about our promotions,” he said.
AA Driving School and BSM Driving School are brands operated as part of Automobile Association Developments Limited.
A spokesperson for both companies said: “We are comfortable that the £3 booking fee for lessons is already transparent and in line with the CMA’s rules and are more than happy to additionally notify customers earlier in the journey as well, which we have already done.”
A spokesperson for Viagogo said: “We have continually engaged constructively with the CMA and will be fully cooperating with their investigation.”
Marks Electrical said it was “committed to full compliance with all applicable consumer and competition laws”, and will cooperate with the investigation.
On the specific point that it automatically opted customers into things such as the removal of old appliances and installation, it said: “Our checkout has endeavoured to present these services with clear descriptions, clear pricing, and a simple one-click option to remove them.
“Product prices and service costs are shown separately and prominently, ensuring customers can make informed decisions before completing their purchase.”
The BBC has contacted StubHub, Gold’s Gym and Wayfair for comment.
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