CCPA Takes Action Against 41 Restaurants for Levying Service Charges Without Customer Consent
The Central Consumer Protection Authority (CCPA) has taken action against 41 eateries, including Chaayos and Barbeque Nation, for allegedly charging service costs without the approval of customers. The CCPA said required service charges are against the Consumer Protection Act, 2019.
Nearly forty-one eateries around the nation have been hit with suo motu actions by the Central Consumer Protection Authority (CCPA). This action is being conducted because these restaurants were reportedly automatically adding service charges to their customers' bills. According to the CCP, this constitutes an unfair trading practice and a violation of consumer rights.
The National Consumer Helpline (NCH) received complaints from consumers, which led to the action. The Department of Consumer Affairs stated that the complaint was backed by bills indicating that service charges were added to customers' bills without their explicit agreement.
CCPA’s Explanation Against the Action Taken
The CCPA has reiterated, according to Pralhad Joshi, Minister of Consumer Affairs, that paying a service charge is totally optional and up to the patron. The relevant eateries have been instructed by the authority to cease automatically adding service charges to customers' invoices, he continued. For example, Chaayos (Sunshine Teahouse Pvt. Ltd.) was fined INR 50,000 by the CCPA for default service charge levies in a final order they received.
In addition, the authorities ordered the business to return the customer's service fee. Furthermore, CCPA has asked that the company change its software-generated billing system so that clients do not automatically have service charges or similar costs added to their invoices. In addition to Chaayos, the following eateries have been served final orders by the CCPA: Among these establishments are Cafe Blue Bottle, Patna; China Gate Restaurant Pvt. Ltd; Fiesta Barbeque Nation; FOO Ahmedabad; L'Opera French Bakery Private Limited; and Zorro – The Luxury Night Club.
What Guidelines’ Ruling States?
Such actions constitute unfair trade practices in violation of the Consumer Protection Act, 2019's Section 2(47) and the Department of Consumer Affairs' 2022 Guidelines on Levy of Service Charge in Hotels and Restaurants. Additionally, the ministry announced that the service price norms set up by the CCPA were upheld in a verdict last year by the Delhi High Court. Consequently, enabling the consumer watchdog to enforce the laws and making it apparent that forced service charges are not based on any legal principles.
Restaurants are prohibited from automatically adding a service charge (or any other kind) per the July 2022 regulations. Also, it can't impose a service charge on consumers against their will. The decision states that restaurants cannot discriminate against customers based on their refusal to pay. Additionally, the service charge and the food bill cannot be combined. Finally, the service charge cannot be subjected to GST by the restaurant.
If consumers discover that a restaurant is charging them for a service charge without asking, they are encouraged by the Department of Consumer Affairs to file a complaint. Call 1915 or visit the National Consumer Helpline's online grievance platform to initiate such a complaint.
