According to the guidelines released by the CCPA, hotels cannot automatically include service charge. It needs to be mentioned as voluntary and optional. Consumers can report violations for redressal.
The Central Consumer Protection Authority (CCPA) on Monday forbade hotels and restaurants from adding service charges automatically or by default to meal bills in response to an increase in consumer complaints and allowed consumers to file complaints if they come across any violations.
Regarding the imposition of service fees, the CCPA has published rules to prevent unfair trade practices and violations of consumer rights. According to the guideline, the chief commissioner of the CCPA instructed that no hotels or restaurants shall include service charge automatically or by default in the bill.
In general, restaurants and hotels add a 10% service charge to the food bill. According to the guidelines, service charges should never be collected under any other names. No hotel or restaurant can force a customer to pay a service fee. They must expressly state to the customer that the service price is optional, voluntary, and at the consumer’s decision.
The guidelines continued, saying that consumers shall not be subject to any access restrictions or service provision limitations based on the collection of service charges. Additionally, the service charge cannot be collected by including it in the food bill and adding GST to the final total.
Redressal System
Any customer can ask the concerned establishment to deduct the service charge from the bill amount if they discover that a hotel or restaurant is charging it in contravention of the rules.
By calling 1915 or using the NCH mobile app, customers can also file a complaint with the National Consumer Helpline (NCH), which serves as an alternative dispute redressal mechanism at the pre-litigation level. Additionally, they can complain to the Consumer Commission. For a quick and effective remedy, the complaint may be submitted electronically through the e-Daakhil portal. Furthermore, the consumer has the option of filing a complaint with the district’s collector for the CCPA to investigate and take appropriate action. The complaint can also be sent to the CCPA via email.
The CCPA claimed that it has discovered, through complaints posted on NCH, that hotels and restaurants automatically include a service charge in the bill without disclosing to customers that paying the fee is optional.
Levied as additional charge
The statement further noted that service charge is being imposed in addition to the entire price of the food items indicated in the menu and applicable taxes, frequently in the form of some additional fee or charge.
The rules stipulate that a service element is included in the cost of the meals and drinks that a restaurant or hotel offers. The product’s price includes both the components of products and services. There are no restrictions on how much hotels or restaurants can charge consumers for meals or beverages. By placing an order, you agree to pay the menu prices for the food products as well as any relevant taxes. Under the Consumer Protection Act, charging anything more or less than the specified amount would be unfair commercial practices.
A tip or gratuity is defined by the CCPA to be towards hospitality received beyond the basic minimum service stipulated between the consumer and the hotel management, and is an optional separate transaction between the customer and hotel/restaurant employees, at the customer’s discretion.
A customer cannot evaluate the quality and service until after the meal is finished, at which point they can determine whether or not to tip and, if so, how much. Consumers do not automatically decide to leave a tip just by going into a restaurant or placing an order. In light of this, guidelines state that service charges cannot be added to the bill involuntarily without providing customers with the choice or discretion to determine whether they wish to pay such a charge or not.
Additionally, it was noted that any admission restrictions based on the collection of service fees constitute unfair business practices. The government released service charge rules earlier in 2017, stating that the levy must be voluntary and not mandatory.
In accordance with an official release, consumer commissions have also ruled in favour of customers in a number of cases involving the imposition of service fees, finding that doing so constitutes unfair business practices and a breach of consumers’ rights.
The Consumer Protection Act of 2019 established the CCPA to oversee issues connected to consumer rights violations, unfair trade practices, and deceptive or false advertising. It was established to advance and uphold the rights of all consumers.
