Service Charge Cannot be Added by Default by Hotels, Restaurants; CCPA Issues Guidelines

The Central Consumer Protection Authority, or CCPA, has on Monday issued an order barring hotels and restaurants from adding service charge automatically or by default in the food bill. The top consumer authority on the day issued guidelines for preventing unfair trade practices and violation of consumer rights with regard to levying of service charge in hotels and restaurants.

“The Central Consumer Protection Authority (CCPA) has issued guidelines for preventing unfair trade practices and violation of consumer rights with regard to levying of service charge in hotels and restaurants,” the consumers affairs ministry said in a statement on Monday.

WHAT ARE THE CCPA GUIDELINES ON RESTAURANT SERVICE CHARGE?

  • As per the CCPA guidelines, hotels or restaurant shall not add service charge automatically or by default in the food bill.
  • No collection of service charge shall be done by any other name. No hotel or restaurant shall force a consumer to pay service charge and shall clearly inform the consumer that service charge is voluntary, optional and at consumer’s discretion.
  • No restriction on entry or provision of services based on collection of service charge shall be imposed on consumers.
  • Service charge shall not be collected by adding it along with the food bill and levying GST on the total amount.

CUSTOMERS CAN FILE COMPLAINT ONLINE
The CCPA also issued guidelines on filing complaints if the customer finds that he or she has been charged with a service fee at any hotel or restaurant.

If any consumer finds that a hotel or restaurant is levying service charge in violation to the guidelines, a consumer may make a request to the concerned hotel or restaurant to remove service charge from the bill amount. Also, the consumer may lodge a complaint on the National Consumer Helpline (NCH), which works as an alternate dispute redressal mechanism at the pre-litigation level by calling 1915 or through the NCH mobile app.

The consumer may also file a complaint against unfair trade practice with the Consumer Commission. The Complaint can also be filed electronically through e-daakhil portal www.e-daakhil.nic.in for its speedy and effective redressal. Furthermore, the consumer may submit a complaint to the District Collector of the concerned district for investigation and subsequent proceeding by the CCPA. The complaint may also be sent to the CCPA by e-mail at [email protected]

Issue Raised by a Number of Customers

“A number of complaints have been registered in the National Consumer Helpline (NCH) by consumers with regard to levying of service charge. The issues raised by consumers include restaurants making service charge compulsory and adding it in the bill by default, suppressing that paying such charge is optional and voluntary and embarrassing consumers in case they resist paying service charge,” CCPA said on Monday.

Various cases relating to levying of service charge have also been decided by consumer commissions in favor of consumers, holding the same as an unfair trade practice and in violation of consumer rights, it said.

DECISION COMES A MONTH AFTER MEETING
This comes a month after the government held a meeting with representatives of associations of restaurants as well as consumers, following complaints on service charges levied by the eateries. In the meeting, consumer affairs secretary Rohit Kumar Singh reportedly said that even as restaurant associations claim the practice is legal, the the consumers affairs department thinks that levying service charge adversely affects the rights of the consumers and it is an “unfair trade practice”.