Service charge

Department of Consumer Affairs convenes restaurant body meeting

New Delhi: The Ministry of Consumer Affairs called a meeting on June 2 with the National Restaurant Association of India (NRAI) to discuss growing complaints that consumers are being forced to pay service charges.

The meeting comes following the department’s consideration of a number of media reports as well as grievances registered by consumers on the National Consumer Helpline (NCH).

Consumer Affairs Secretary Rohit Kumar Singh has also written to the NRAI Chairman to point out that restaurants and eateries collect service charges from consumers by default, even though the collection of such charges is voluntary.

The secretary also pointed out in the letter that consumers are forced to pay service charges, often set at arbitrarily high rates by restaurants.

Consumers are also being “falsely misled” about the legality of these charges and harassed by restaurants when they ask to remove these charges from the bill amount.

Given that this issue has a daily impact on consumers as a whole and has significant ramifications for consumer rights, the department has found it necessary to examine it more closely and in detail,” the letter adds.

Customers don’t know the service charge is optional

During the June 2 meeting, the ministry plans to discuss consumer complaints about the inclusion of service charges in the bill under cover of other fees or charges.

The meeting will also discuss how consumers are kept in the dark that paying the service fee is optional and voluntary and how they feel embarrassed if they resist paying the service fee.

In April 2017, the ministry issued guidelines on charging service fees by hotels/restaurants.

The guidelines note that a customer’s entry into a restaurant cannot be construed as consent to pay a service charge. Any restriction on consumer entry by requiring them to pay a service charge as a condition of placing an order amounts to a “restrictive business practice” under consumer protection law.

The guidelines clearly mention that the placing of an order by a customer is equivalent to his commitment to pay the prices displayed on the menu card as well as applicable taxes. To charge anything other than the above, without the customer’s consent, would amount to an unfair commercial practice as defined by law.

In accordance with the guidelines, a customer has the right to exercise their rights as a consumer to be heard and redressed under the provisions of the law in the event of unfair/restrictive commercial practices. Consumers may apply to a consumer dispute resolution board/forum in the appropriate jurisdiction.