Hotels or restaurants are now barred from levying service charge automatically or by default in food bills, the Union Consumer Affairs Ministry announced on Monday, July 4. In a slew of guidelines, the Central Consumer Protection Authority (CCPA) said that hotels and restaurants are now mandated inform customers that paying service charge is voluntary and optional, and in case of a violation, customers can file an official complaint through the National Consumer Helpline (NCH). The rules have been passed in an attempt to prevent unfair trade practices and violation of consumer rights in hotels and restaurants.
The Union government had already been mulling to bring a legal framework in order to stop the practice of hotels collecting service charge, which was opposed by the hotel and restaurant associations. In case any consumer comes to know that they had been levied of a service charge without their prior knowledge, they can make a request to the concerned hotel/restaurant to remove service charge from the bill amount, and also opt to file a complaint via NCH - by calling 1915 or through the mobile app. A complaint can also be filed in the regard with the Consumer Commission through e-daakhil portal (www.e-daakhil.nic.in) or emailed to CCPA (com-ccpa@nic.in).
The Union government said that it has taken cognisance of various cases where service charges were levied. “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 charges,” the Central Consumer Protection Authority said.
The CCPA, in its guidelines, said a tip or gratuity is towards hospitality received beyond basic minimum service contracted between the consumer and the hotel management, and constitutes a separate transaction between the consumer and staff of the hotel/restaurant at the consumer's discretion. The guidelines state that a component of service is inherent in price of food and beverages offered by a restaurant or hotel. "Pricing of the product covers both the goods and services component. There is no restriction on hotels or restaurants to set the prices at which they want to offer food or beverages to consumers.”
The decision to pay a tip by a consumer does not arise merely by entering the restaurant or placing an order. "Therefore, service charge cannot be added in the bill involuntarily, without allowing consumers the choice or discretion to decide whether they want to pay such charge or not," the guidelines said. Further, any restriction of entry based on collection of service charge amounts to unfair trade practice, it added.
(With PTI inputs)