Drip pricing: Hidden fees for online customers set to be bannedon January 24, 2024 at 12:02 am

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Hidden charges for online shoppers are set to be banned as part of plans to make prices more transparent.

Woman making a payment with her card on her smartphoneImage source, Getty Images

Unavoidable hidden charges for online customers, or “drip pricing”, is set to be banned under new law proposals.

Fake reviews will also be banned and firms will have to be clearer with price labels on supermarket shelves.

It follows a government consultation on consumer transparency that found some businesses are not as clear as they could be about prices.

Drip pricing occurs 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.

A report from the Department for Business and Trade suggested the practice was widespread and used by more than half of entertainment providers and businesses in the hospitality industry.

Drip pricing is particularly prevalent in the transport and communication sectors, it found, with unavoidable fees costing consumers as much as £2.2bn a year.

It will be proposed under the new rules that mandatory fees must be included in headline prices online.

For cinema or train tickets, for example, any mandatory booking fees must be clear from the start of the shopping process.

Fees for optional add-ons like airline seat reservations or luggage upgrades for flights will not be included in the measures.

The new rules are expected to come into force this spring.

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 increased risk of confusion, scams and traps that can easily cost the public more than they had planned.”

He said that the Bill will help customers compare purchases and ensure they “aren’t duped by fake reviews.”

The government department said reviews were found to be used by 90% of consumers when weighing up purchases and contributed to the £224bn spent in online retail markets in 2022.

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

A spokeswoman for the CMA said that it was “positive” to see government “pushing ahead with changes to tackle behaviour that misleads shoppers or leaves them out of pocket.”

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

The Department for Business said proposed changes would ensure unit pricing was consistently applied, including to promotions and special offers, to help shoppers compare like-for-like and work out which buys represent the best value.

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