DoCA cautions restaurants against forcefully levying service charges on consumers

The Department of Consumer Affairs (DoCA) on Monday warned restaurants and eateries against collecting service charge from consumers by default.

In a letter written by Rohit Kumar Singh, Secretary, Department of Consumer Affairs to President, National Restaurant Association of India, it has been pointed out that the restaurants and eateries are collecting service charge from consumers by default, even though collection of any such charge is voluntary and at the discretion of consumers and not mandatory as per law, DoCA said in an official statement. 

The statement also said the department took into consideration a number of media reports as well as grievances registered by consumers on the National Consumer Helpline (NCH) on service charged levied by restaurants.

It has been pointed out in the letter that the consumers are forced to pay service charge, often fixed at arbitrarily high rates by restaurants. Consumers are also being falsely misled on the legality of such charges and harassed by restaurants on making a request to remove such charges from the bill amount, DoCA said, adding, “Since this issue impacts consumers at large on a daily basis and has significant ramification on the rights of consumers, the department construed it necessary to examine it with closer scrutiny and detail."

DoCA listed the following issues pertaining to complaints by consumers which will be discussed: 

-Restaurants making service charge compulsory

-Adding service charge in the bill in the guise of some other fee or charge.

-Suppressing from consumers that paying service charge is optional and voluntary.

-Embarrassing consumers in case they resist from paying service charge

Notably, the department had earlier on 21 April, 2017 had published guidelines on charging of service charge by hotels and/or restaurants. The guidelines noted that entry of a customer in a restaurant cannot be itself be construed as a consent to pay service charge. Any restriction on entry on the consumer by way of forcing her/him to pay service charge as a condition percent to placing an order amount to ’restrictive trade practice’ under the Consumer Protection Act.

DoCA also stated today that the earlier guidelines clearly mentioned that placing of an order by a customer amount to his/her agreement to pay the prices displayed on the menu card along with the applicable taxes. "Charging for anything other than the aforementioned, without express consent of the customer, would amount to unfair trade practice as defined under the Act."

As per the guidelines, a customer is entitled to exercise his/her rights as a consumer to be heard and redressed under provisions of the Act in case of unfair/restrictive trade practices. Consumers can approach a Consumer Disputes Redressal Commission / Forum of appropriate jurisdiction, it highlighted.