So-called ‘drip pricing’ is costing UK consumers £1.6 billion a year online, the Government said.
A proposal to crack down on hidden charges for online consumers has been put forward by the Government as it says new research shows the practice is widespread.
The Department for Business and Trade (DBT) said it will consult on plans to improve transparency around how prices are displayed in an effort to root out so-called drip pricing, where only part of a product’s price is originally advertised but with hidden obligatory fees pushing up the final cost.
New Government research confirmed the practice is “widespread”, according to the DBT, which said drip pricing has been used by 54% of providers in the entertainment industry, rising to 56% in hospitality, and to 72% across transport and communication sectors.
The cost to UK consumers online is £1.6 billion a year, the Government said.
The DBT said the tactic has been used for products including train tickets and food deliveries.
The Government will now consult on potentially enforcing changes, which follows a suggestion from Prime Minister Rishi Sunak in June that the Government would take further action on the issue.
The DBT said it is consulting on what action the Government should take in response to drip pricing, which could include adding it to a list of commercial practices considered to be unfair and so prohibited under the Digital Markets, Competition and Consumers Bill.
The intended effect would be that information about mandatory fees would have to be presented to consumers at the start of the purchasing process.
Labour has previously proposed making such a change.
The Government is also launching a consultation on measures to prevent fake reviews online, which could see that practice added to the same list.
Elsewhere, plans to simplify food labelling are also being consulted on, the Government said, following a review by the Competition and Markets Authority (CMA).
The DBT said it has put forward proposals to reform the price marking order, which requires traders to display the final selling price in a clear way, with the plans seeking to ensure unit pricing is consistently applied, including to promotions and special offers.
Business and trade minister Kevin Hollinrake said: “Today’s measures will help people keep hold of their hard-earned cash and ensure they have the clearest and most accurate information upfront before they make a purchase.
“From the shelves of supermarkets to digital trolleys, modern-day shopping provides a great wealth of choice.
“But fake reviews and hidden fees can make those choices increasingly confusing and leaves customers unsure about what product is right for them.
“We’ll be listening to industry to ensure these new regulations work for businesses too and don’t generate unnecessary burdens, while at the same time providing a crucial safety net for consumers and their cash.”
