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‘Drip pricing’ set to be banned as part of online shopping reforms

Unavoidable fees cost consumers £2.2 billion every year, figures suggest (PA)
Unavoidable fees cost consumers £2.2 billion every year, figures suggest (PA)

Unavoidable hidden charges for online consumers – or “drip pricing” – is set to be banned under new laws to force businesses to be upfront with their customers.

Fake reviews will also be added to a list of banned business practices, and firms will have to provide clearer labelling for prices on supermarket shelves, the Department for Business and Trade (DBT) said, following a consultation into consumer transparency.

The measures will be legislated for as part of the Digital Markets, Competition and Consumers Bill as it progresses through Parliament.

Drip pricing occurs when consumers are shown an initial price for an item or service, only to find additional fees are revealed later in the checkout process.

Research suggested it was widespread and used by 54% of entertainment providers, across 56% of the hospitality industry, and 72% of the transport and communication sectors, the DBT said.

Unavoidable fees cost consumers £2.2 billion every year, it added.

Under the new rules, mandatory fees must be included in the headline price or at the start of the shopping process, including booking fees for cinema and train tickets.

Optional fees such as airline seat and luggage upgrades for flights will not be included in the measures.

Minister for Enterprise, Markets and Small Business Kevin Hollinrake said: “From supermarket shelves to digital baskets, modern day shopping provides customers with more choice than ever before. But with that comes the increased risk of confusion, scams and traps that can easily cost the public more than they had planned.

“Today’s announcement demonstrates the clear steps we’re taking as a government to ensure customers can compare purchases with ease, aren’t duped by fake reviews, and have the sting of hidden fees taken away.”

The DBT said reviews were found to be used by 90% of consumers and contributed to the £224 billion spent in online retail markets in 2022.

The Competition and Markets Authority (CMA) has contributed to new guidance to tackle fake reviews, which would make website hosts accountable for reviews on their pages.

Meanwhile, the Price Marking Order (PMO), which requires traders to display the final selling price, and where appropriate the final unit price – for example the price per kilogram – will also be reformed.

The DBT said proposed changes would ensure unit pricing was consistently applied, including to promotions and special offers, to help consumers compare products easily and identify what items represent the best value.

These are expected to be issued in the spring.

British Retail Consortium assistant director Graham Wynn said: “The BRC looks forward to continuing to work with officials as practical detailed implementation plans are developed. We are committed to ensuring information given to consumers is clear and they are not misled in any way.”

A CMA spokeswoman said: “It’s positive to see the Government pushing ahead with changes to tackle behaviour that misleads shoppers or leaves them out of pocket – which includes accepting the CMA’s recommendations for clearer groceries pricing.

“Stronger laws and tools, including giving the CMA the power to fine companies for breaching consumer law under the DMCC Bill, will bolster the work we are already doing to protect consumers.”