This week, the Department for Business and Trade said it would crack down on hidden fees in products ranging from train tickets to takeaways, as it launched a consultation exercise on proposals to weed out ‘drip pricing’. This is where the final price paid is higher than originally advertised due to additional fees, such as paying to choose a seat on a plane or carry on more than a small bag. 

Such practices are most prevalent among companies in the entertainment (54 per cent using drip pricing), hospitality (56 per cent) and transport and communications sectors (72 per cent), the department said, adding that consumers were spending £1.6bn a year on these fees. 

Analysis of transactions on more than 500 mobile apps found 41 per cent contained dripped fees deemed to cause harm – these included mandatory, pre-selected or optional charges presented more than halfway through the checkout process, costing more than 25 per cent of the initial price, or processes containing three or more dripped fees.

It deemed fees charged by airlines for extra luggage or for fast-track access as harmful as, although these are optional, they are costly relative to the base price and take place late in the buying process. “Unclear pricing of products does not suit the consumer,” said Kevin Hollinrake, minister for enterprise, markets and small business. “We cannot have efficient markets without price transparency.” 

Susannah Streeter, head of money and markets at Hargreaves Lansdown, described the consultation as “hugely welcome” and said it would shine a light on some of the sharper practices engaged in by some airlines, such as charging customers big fees if they have forgotten to print boarding cards.

However, Peel Hunt analyst Alexander Paterson said that for the transport sector, the measures were “a complete waste of time”.

Companies generally offer a menu of services that are “entirely transparent”, he said, meaning customers who do not need to bring luggage are not forced to pay for it. He also argued that fees charged through aggregators such as Trainline (TRN) can be avoided by booking directly with train operators.

David Reynolds, an analyst with stockbroker Davy, said the government would face difficulties in getting low-cost carriers such as easyJet (EZJ) and Ryanair (IE:RYA) to alter their pricing models, given that they work on “fairly thin margin profiles”. The government’s example of optional fees include charges for luggage on long-haul flights, which may not impact short-haul specialists easyJet and Ryanair. 

The government is also looking to ban the buying and selling of fake reviews and to make website owners responsible for making sure comments “reflect genuine consumer experiences”.

This could be an issue for review platform Trustpilot (TRST), which has been a target for groups trading fake reviews, according to consumer title Which?

A Trustpilot spokesperson welcomed the consultation, saying that it removed around 5 per cent of the reviews submitted to its platform last year on suspicion of being fake.

Reynolds at Davy argued that fake reviews were “a trivial issue” for the company compared with some of the more significant business challenges that it faces.

Trustpilot is trying to crack a US market dominated by tech giants such as Amazon (US:AMZN) and Google, and is continuing to rack up losses. Its share price has plunged by 68 per cent since its 2021 stock market listing and it recently drafted in ex-Just Eat chief operating officer Adrian Blair as chief executive to replace founder Peter Holten Mühlmann.

The main risk the business faces is that the corporate customers it charges for hosting reviews consider the service “a nice to have rather than a must”, Reynolds said.

“If the cyclical downturn gathers momentum then I think the discretionary dynamic of Trustpilot spend will perhaps become much more clear.”