The AA has been fined a total of £4.2million and ordered to repay more than £760,000 to learner drivers after uncovering illegal pricing practices.
The Competition and Markets Authority has ordered the associated driving schools to refund more than 80,000 customers after an investigation discovered learners were being charged booking fees when signing up for driving lessons online.
The regulator said the AA Driving School and BSM Driving School, which are both owned by Automobile Association Developments Limited, broke consumer law by failing to show the full price at the outset.
The amount each customer receives will depend on how many lesson packages they purchased, although the average refund is expected to be around £9.
This is the first time the CMA has issued a financial penalty using its stronger enforcement powers under the Digital Markets, Competition and Consumers Act 2024.
The investigation found that both driving schools used so-called "drip pricing", a practice where additional charges are only revealed later in the purchasing process.
Customers booking lessons between April and December 2025 were initially shown prices that did not include a compulsory £3 booking fee.
This fee only became visible at a later stage, often at the point of payment.
The CMA investigation found learner drivers were paying a £3 fee unknowingly
| PAFirst-time customers only saw the true total after selecting lessons, choosing times and entering their personal details.
Returning customers were shown the fee separately, but it was not fully included in the advertised price until the checkout stage.
Consumer protection law requires that all unavoidable costs must be clearly included in the headline price from the beginning.
By adding the fee later in the process, the companies gave a misleading impression of the true cost.
The CMA's 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, not added at checkout so consumers always know what they need to pay.
"At a time when people are watching every pound, dripped fees can tip the balance. And when it comes to something as important and costly as learning to drive, people deserve clarity."
Ms Cardell also warned that other companies could face similar action if they fail to follow the rules introduced by the regulator.
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Affected drivers will be issued automatic refunds from the AA
| GETTY
Roughly 80,000 learner drivers were impacted by the fees
| PAUnder the terms of the settlement, the company must also provide regular updates to the CMA on the progress of its refund programme over the next year.
The case is being seen as a major test of the regulator's new powers and sends a clear signal that companies using unclear fees risk facing significant penalties.
A spokesperson for AA driving schools told GB News: "Although the £3 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 £3 booking fee more prominent. We are now refunding all relevant customers.
"While we are disappointed with the outcome of the investigation, we have fully cooperated with the CMA throughout and would emphasise that protecting consumer rights has been central to our business for more than 120 years."