The owner of the AA and BSM driving schools must pay refunds to thousands of learners after failing to disclose the total price for lessons upfront when booking online, following an investigation by the competition watchdog.

Automobile Association Developments has also been fined ยฃ4.2m for breaking consumer law, the Competition and Markets Authority (CMA) said.

More than 80,000 customers of the AA Driving School and BSM will share ยฃ760,000, making the average payout around ยฃ9.

A spokesperson for AA and BSM driving schools said it was "disappointed with the outcome of the investigation" but "cooperated fully" throughout.

They said: "Although the ยฃ3 booking fee was made clear to customers prior to their purchase, we acknowledge it should have also been displayed at the start of the online booking journey.

"Having listened to the regulator, we made immediate changes to our website to make the ยฃ3 booking fee more prominent. We are now refunding all relevant customers."

The CMA's investigation found that people booking lessons online between April and December last year were initially shown prices that did not include a mandatory booking fee.

It was only shown at the checkout stage, after new customers had gone through selecting lessons, choosing times and entering their personal details.

The practice is known as "drip-pricing" which is illegal and can mislead customers into choosing a service or product for a low price, only for it to be increased later.

CMA chief executive Sarah Cardell, said: "If a fee is mandatory, the law is clear: it must be included in the price from the very start โ€“ not added at checkout โ€“ so consumers always know what they need to pay."

She added: "At a time when people are watching every pound, dripped fees can tip the balance."

In November the watchdog launched an investigation into eight businesses including AA Driving School and BSM Driving School.

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