UK rail regulator increases focus on online ticket retailing, hidden fees and 'drip pricing'

Train ticket retailers' practices have come under scrutiny from the Office of Rail and Road (ORR), the industry regulator for Britain's railways, which published its review in December of the transparency of fees that are charged to customers when purchasing tickets online. Online train tickets are sold by train operators as well as third-party retailers.

ORR has concurrent powers with the Competition and Markets Authority (CMA) to enforce consumer legislation in relation to the rail sector. As part of this role, ORR wants to ensure that consumers are provided with clear, timely and accurate information when buying rail tickets. The regulator undertook the review of processes that retailers use to sell tickets online, with a view to comparing practices and establishing compliance with consumer law.

ORR's focus in this area may be timely given the anticipated passing of the Digital Markets, Competition and Consumers (DMCC) Bill, which is expected to become law later this year. Hidden charges are likely to come under greater scrutiny once the DMCC Bill comes into force and retailers will want to ensure compliance with consumer law principles to avoid enforcement action by regulatory bodies. 

ORR's fees review

ORR reviewed the transparency of booking, finder's, fulfilment and refund fees.

Booking fees are mandatory fees charged by retailers for buying a ticket on their platform and are sometimes charged as a fixed fee and sometimes vary with the ticket price or the timing of the purchase. Finder's fees are mandatory fees charged by retailers that sell split-ticketing options and are usually structured as a percentage of the saving achieved from splitting the journey;

Fulfilment fees are charged for collecting a ticket from a vending machine at a station or for delivering the ticket to the customer's address. Refund fees are mandatory fixed fees charged when a customer changes their mind and decides not to travel and requests a refund.

Each of these fees was assessed against consumer law principles.

'Upfront' information

In particular, ORR reviewed whether retailers provided specific information regarding fees as part of the "upfront" price. It found that not all retailers did this and, where mandatory fees are not included in the upfront price, this means that consumers may end up paying more than they expected.

This is because of "drip pricing", where fees are only shown at a later stage in the process of a transaction, at which point the consumer is invested in the process. This also makes comparisons with other websites and retailers more difficult for the consumer.

The regulator also reviewed whether a clear breakdown at each stage of the total price was provided and showed the split between the ticket price and any fee, giving appropriate prominence to the fee.

It found that some retailers only provided a breakdown towards the end of the booking process. Certain retailers did not give equal prominence to the booking fee and the ticket price, making it harder for consumers to understand what they are being charged and which part of the price represents the ticket price, and which part is a fee. This again makes it hard for consumers to make an informed choice and compare between retailers.

The regulator's review also looked at whether there was readily available, transparent and accurate information about fees for consumers to read in advance of engaging with the booking process; for example, in a separate and accessible section of the retailer's website, explaining how fees are calculated and interactions with the ticket price.

It found that only some of the online retailers provided full details about their fees online, and that the level of information available, and its accuracy, varied between retailers. They also found variations in the accessibility of this information across retailers' websites.

DMCC Bill: new consumer protection requirements?

Retailers of train tickets are required to comply with consumer law in order to ensure that passengers who purchase tickets are provided with the information they need to make informed choices, and compare between different retailers, when making purchasing decisions.

The new DMCC Bill, which is expected to come into force later this year, is likely to strengthen consumer protection in this area and is expected to codify the law in relation to unfair commercial practices.

Specifically, traders will be liable for misleading actions and omissions relating to the supply of their products to consumers, if those actions or omissions are likely to cause the average consumer to take a transactional decision that they would not otherwise have taken. For example, if a trader uses a commercial practice which omits "material information" – that is,  information that the average consumer needs to take an informed transactional decision – this would constitute a misleading omission.

The DMCC Bill also sets outs information requirements where traders create an "invitation to purchase". This is a commercial communication that indicates the characteristics of a product and its price and enables a consumer to make a purchase – it might not be accompanied by an actual opportunity to purchase (for example, an order form) or appear in proximity to and at the same time as the opportunity. But, as soon as the information about the product and its price are advertised, the invitation to purchase is created and the information requirements apply.

In the context of an invitation to purchase, the DMCC Bill sets out specific information which is considered "material information" and must be included. This covers the price, including any taxes, and any freight, delivery or postal charges. If the charges cannot reasonably be calculated in advance, then the trader will be required to notify the consumer of the charges that may be payable. In the context of selling train tickets, retailers will be expected to be clear about the breakdown of ticket pricing and any related charges in order to maintain compliance with these requirements.

Comparison with online accommodation bookings

The CMA has published consumer guidance for a number of specific markets. For a comparison with other sectors, it is helpful to draw on the CMA's principles for businesses offering online accommodation booking services. These provide guidance for online retailers on how pricing information and fees should be displayed, including for websites, and on what is meant by "clear" and "prominent" in the context of displaying information to consumers.

The CMA published the principles for businesses offering online accommodation booking services following its sector-wide investigation into these platforms' practices and concerns around clarity, accuracy and presentation of information.

The principles include ensuring that consumers are not misled about the amount they have to pay. Hotel booking websites must ensure that the price shown is the total cost, including compulsory taxes, charges and fees that are reasonably calculable based on the search criteria. Charges are compulsory if consumers cannot avoid them.

Also, when a breakdown of the price is displayed, the total price must be displayed clearly and prominently next to the constituent elements.

Guidance definitions

The principles guidance also provides helpful definitions. It says that "clear" and "clearly" means that  information must be clear, displayed in plain language, easily understandable, accurate and not misleading both by action or omission.

It also says that "prominent and prominently" means information must be presented so that it:

• Is noticeable to consumers.
• Is in a font, size, colour and position to enable the consumer to easily identify, read and understand the information, including as compared with other information on the page.
• Does not require the user to take any action to access the information.

These principles are useful in drawing a comparison between the online accommodation booking market and the market for online rail ticket sales. In both cases, retailers are required to ensure that the information presented to passengers in relation to fees and the breakdown of pricing is clear and accurate, so retailers can reasonably draw on these principles when designing their platforms to ensure that they comply with best practice.   

Osborne Clarke comment

Drawing on the DMCC Bill, the CMA's guidance and ORR's review, there are a few principles that may represent sensible practice for retailers to adopt when displaying and providing information about fees.

When displaying fees, the ticket price and any fees should be given equal prominence on the page. This would include presenting this information in a reasonable size font and colour and in a way that does not require the consumer to take any further action to access the information; for example, to click onto another page.

When providing information about fees, retailers should set out information on fees separately from their terms and conditions, in plain English and in a form that is easy for the consumer to understand. It should be easily accessible in a page that is "one click away" from the retailer's home page.

ORR stated in its report that it has written to a number of retailers and would publish the outcome of its engagement with those retailers after January 2024.

We can reasonably expect to hear more from them about its conclusions from this engagement in the near future.