CCPA cracks down on 41 restaurants for levying service charges without consumers' consent
New Delhi, July 19
The Central Consumer Protection Authority has initiated suo motu action against 41 restaurants across the country for violation of consumer rights and adoption of unfair trade practices by levying service charge by default on consumers' bills, according to an official statement issued on Sunday.
The action has been taken based on complaints received through the National Consumer Helpline (NCH). The complaints were supported by invoices showing that service charge had been automatically added to consumers' bills without obtaining their explicit consent.
Based on these complaints, CCPA conducted investigations and found that the automatic levy of service charge violated the Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest about Levy of Service Charge in Hotels and Restaurants.
In one such case, CCPA passed a final order against Chaayos (Sunshine Teahouse Pvt. Ltd.), imposing a penalty of Rs 50,000 for levying service charge by default and directing the company to reimburse the service charge collected from the consumer.
The company has also been directed to modify its software‑generated billing system across all its outlets to ensure that a service charge or any similar charge is not automatically added to consumers' bills.
The other restaurants that CCPA has passed final orders against include Cafe Blue Bottle, Patna; China Gate Restaurant Pvt. Ltd.; Fiesta Barbeque Nation (Barbeque Nation Hospitality Private Limited); FOO Ahmedabad Restaurant; L'Opera French Bakery Private Limited; and Zorro - The Luxury Night Club.
Further proceedings are also underway against other restaurants where complaints have been received and examined.
The Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest about Levy of Service Charge in Hotels and Restaurants, issued on 4 July 2022, provide that no hotel or restaurant shall automatically or by default add a service charge to the food bill. No hotel or restaurant shall force a consumer to pay a service charge and must clearly inform consumers that it is voluntary, optional, and entirely at the consumer's discretion.
The guidelines also state that no restriction on entry or on the provision of services shall be imposed on consumers for not paying a service charge.
CCPA encourages consumers to report instances where restaurants levy service charge by default through the National Consumer Helpline by calling 1915 (toll‑free) or through the NCH platform.
— IANS
Reader Comments
Look, I understand restaurants have costs and margins are thin. But forcing service charge without asking is plain wrong. Give customers the choice. If service is good, many of us will tip voluntarily anyway. What I do find ironic is that these same restaurants claim to be 'customer first' in their marketing. Well, now they've been called out. Good riddance to bad practices.
As someone who has lived in both India and abroad, this is a step in the right direction. In many Western countries, service charge is optional or included transparently in menu prices. The Indian habit of adding sneaky charges is really off-putting. I hope this sets a precedent for other industries too. Airlines and hotels also need to be more transparent with their 'convenience fees' and 'service taxes'. Kudos to CCPA.
Honestly, I'm conflicted. On one hand, yes, consent is important. On the other hand, restaurant workers often depend on these charges for fair wages, especially in places where minimum wage is low. But if restaurants were transparent and let customers choose, maybe both sides could win. The real problem is restaurants using service charge as a hidden price hike while paying staff peanuts. CCPA should also look into wage issues, not just billing practices.
Excellent move by CCPA. I'd gone to a popular chain in Mumbai and they automatically added 10% 'service charge'. When I asked to remove it, the manager gave me attitude, saying it's 'standard practice'. No longer! Now I'll happily report any restaurant doing this. Also, good that CCPA has made it easy to complain via toll-free number. Consumer protection is finally getting teeth in India. 🇮🇳
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