Service charge

Government bans hotels and restaurants from forcing customers to tip staff

The central government issued new guidelines on Monday (July 4) and banned restaurants and hotels from charging service charges without a restaurant’s express consent. According to a statement from the Ministry of Consumer Affairs, customers can file complaints if the ban is violated.

“Guidelines issued by the CCPA state that restaurants or hotels should not add a service charge automatically or by default in the food bill. Any other name should not collect a service charge. No restaurant or hotel should force a consumer to pay the service fee and advise that the service fee is voluntary, optional and at the discretion of the consumer,” the government statement read.

Unfair commercial practice

The Central Consumer Protection Authority (CCPA), a regulator established in 2019, has challenged the practice of charging default service charges as an unfair business practice.

Levy has been in contention for many years now. In June, the central government held a meeting with the restaurant lobby and consumer rights groups, after which the ministry said it would add a new framework to the bar’s service charge, Hindustan reported. Times.

In May, the consumer department had written to the National Restaurant Association of India about the abuse of customers’ rights. The ministry had noted that service charges set by restaurants are often arbitrarily high. The letter also mentioned misleading customers about the legality of the costs.

Service component included in the cost of food

The guidelines stated that a service element is already included in the cost of food and beverages offered by a hotel or restaurant, and that there is no restriction on them to set the prices at which they want to provide food or drink to consumers, Scroll reported.

The authority said that when customers order a menu item with applicable taxes, they are consenting to pay for it. “To charge anything other than the said amount would amount to unfair commercial practices under the [Consumer Protection] Take action,” the guidelines state.

She added that tipping is a separate voluntary transaction between the consumer and hotel staff. “It is only after eating the meal that a diner is able to assess the quality as well as the service and decide whether or not to tip and, if so, how much,” added the authority.

People cannot be refused entry based on whether or not they consent to the service charge, and the money cannot be “received by adding it to the food bill and charging GST on the amount total”.

The statement says consumers can contact the company first. If the problem is still unresolved, they can report the dispute to the National Consumer Helpline (NCH) by calling 1915 or through its mobile app or by filing a complaint with the district administration. “The consumer can also file a complaint against an unfair commercial practice with the Consumer Commission. It can also be filed electronically through the e-daakhil portal…”, he added.

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