The Union government on Monday, May 23, warned restaurants against forcing customers to pay service charges, and reminded them that collection of service charges is voluntary and is not mandated by law. The Department of Consumer Affairs (DoCA) said that it has taken note of media reports as well as grievances registered by consumers on the National Consumer Helpline (NCH) that restaurants are collecting service charges by default.
The DoCA has scheduled a meeting with the National Restaurant Association of India on June 2, 2022, to discuss issues pertaining to service charges. The DoCa has written to the restaurant association noting that consumers are forced to pay a service charge which is fixed arbitrarily by restaurants.
The letter says that restaurants are charging anywhere between 5-10%, and service charge is often treated as an opt-out rather than an opt-in. The letter adds that consumers are being “falsely misled” on the legality of such a charge and are harassed when they request that the amount be removed.
“Since this issue impacts consumers at large on a daily basis and has significant ramifications on the rights of consumers, the department construed it necessary to examine it with closer scrutiny and detail,” the letter further adds.
The complaints that would be discussed during the meeting with the restaurant body includes: service charge being made mandatory by restaurants, adding service charge in a bill in the guise of some other fee or charge, and suppressing from customers that the charge is voluntary and not mandatory and embarrassing consumers in case they resist paying.
The department also highlighted the guidelines published in 2017, which state that the customer entering the restaurant cannot imply consent to pay a service charge. “Any restriction on entry on the consumer by way of forcing her/him to pay the service charge as a condition per cent to placing an order amount to ’restrictive trade practice’ under the Consumer Protection Act,” the statement said.
It added that the customer has to pay the prices on the menu card along with the applicable taxes and charging anything else without the express consent of a customer can be an unfair trade practice as per the Consumer Protection Act. In the case of restrictive trade practices, the consumer can exercise their rights and approach a Consumer Disputes Redressal Commission.
The department’s letter comes days after a Hyderabad restaurant was forced to refund the service charge as well as pay up to a customer who tried to get the service charge removed but was not allowed to. A city-based advocate had filed a complaint and the district consumer forum directed the restaurant to refund the complainant and said that service charges must be optional.