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DoCA Warns Restaurants Against Imposing ‘Service Charges’ on Customers

Under the Consumer Protection Act, any restriction on entry on the consumer by requiring her/him to pay a service charge as a condition of placing an order is considered a "restrictive trade practice."

Shivam Dwivedi
View of a Restaurant
View of a Restaurant

Department of Consumer Affairs (DoCA) has scheduled a meeting with the National Restaurant Association of India on June 2, 2022, to discuss issues pertaining to Service charges levied by restaurants. The meeting is the result of the DoCA taking notice of a number of media reports as well as consumer complaints registered with the National Consumer Helpline (NCH).

In a letter to the President of the National Restaurant Association of India, Rohit Kumar Singh, Secretary, Department of Consumer Affairs, stated that restaurants and eateries are collecting service charges from customers by default, despite the fact that such charges are voluntary and at the discretion of the customers, and are not required by law.

According to the letter, consumers are forced to pay service charges, which are frequently set arbitrarily high by restaurants. Consumers are also being misled about the legality of such charges and harassed by restaurants when they request that such charges be removed from their bill. "Because this issue affects consumers at large on a daily basis and has significant ramifications on consumer rights," the letter continues, "the department construed it necessary to examine it with greater scrutiny and detail."

During the meeting, the following consumer complaint issues will be discussed:

  • Restaurants making service charges compulsory

  • Including a service charge in the bill disguised as another fee or charge.

  • Ignoring the fact that paying the service charge is optional and voluntary.

  • Making customers feel embarrassed if they refuse to pay the service charge

It is worth noting that the Department of Consumer Affairs has already issued guidelines on the charging of service charges by hotels and restaurants, which were published on April 21, 2017. The guidelines state that simply entering a restaurant does not imply that the customer agrees to pay a service charge.

Under the Consumer Protection Act, any restriction on entry on the consumer by requiring her/him to pay a service charge as a condition of placing an order is considered a "restrictive trade practice."

The guidelines state that placing an order constitutes the customer's agreement to pay the prices listed on the menu card, plus any applicable taxes. Charging for anything other than the aforementioned without the customer's express consent would be considered unfair trade practice under the Act.

According to the guidelines, in the event of unfair or restrictive trade practises, a customer has the right to be heard and redressed under the Act's provisions. Consumers can file a complaint with the appropriate Consumer Disputes Redressal Commission or Forum.

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