On the basis of complaints received by the National Consumer Helpline regarding mandatory imposition of service charge and non-refund of the amount, the Central Consumer Protection Authority (CCPA) has taken suo moto action against five restaurants of Delhi.
According to a notification by the Ministry of Consumer Affairs, Food & Public Distribution, notices have been issued to the restaurants namely Makhna Deli, Xero Courtyard, Castle Barbeque, Chaayos, and Fiesta by Barbeque Nation under the Consumer Protection Act, 2019. The restaurants have been directed to refund the service charge amounts.
Effort to reduce pressure on consumers at restaurant
This measure is aimed at reducing the undue pressure on consumers to pay additional amount at the time of availing services at any restaurant.
No hotel or restaurant shall force a consumer to pay service charge.
Service charge cannot not be collected from consumers by hotel/restaurants by falsely showing it as any other charge.
CCPA guidelines to curb unfair trade practices
The Central Consumer Protection Authority (CCPA) issued guidelines on July 4,2022 to curb unfair trade practices and protect consumer interests regarding service charges in hotels and restaurants.
The guidelines stipulate that:
No hotels or restaurant shall 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.
What is Central Consumer Protection Authority?
The Central Consumer Protection Authority was established under Section 10 of the Consumer Protection Act, 2019. Its primary mandate is to regulate matters related to the violation of consumer rights, unfair trade practices, and false or misleading advertisements that are detrimental to the interests of the public and consumers at large.
Delhi High Court upholds CCPA guidelines on service charges
On March 28, this year the Delhi High Court upheld the CCPA guidelines on service charges. Subsequently, it came to the notice of the Central Consumer Protection Authority (CCPA), through complaints received on the National Consumer Helpline (1915), that grievances had been registered alleging that certain restaurants continued to impose a mandatory service charge without obtaining prior consent from consumers, thereby disregarding consumer rights and indulged in unfair trade practices as per the Consumer Protection Act, 2019.
