Hotels, restaurants can’t force consumers to pay service charges; it will be a voluntary option at consumer’s discretion. The Central Consumer Protection Authority (CCPA) has issued guidelines to prevent unfair trade practices and violation of consumer rights on levying service charge in hotels and restaurants.
The regulations forbid automatically increasing service charges and requiring customers to pay them. Restaurants and hotels must expressly tell customers that the service charge is optional, voluntary, and at the customer’s discretion.
Consumers can lodge complaints on National Consumer Helpline number 1915 against hotels/restaurants charging service charge, as per the CCPA order.
Service charge in hotel/restaurant bill cannot be collected from consumers by any other name, nor can it be added to food bill, as per the order.
The Department of Consumer Affairs (DoCA) previously stated that it would soon develop a strong framework to enforce strict compliance by the stakeholders with regard to the service charge imposed by restaurants and hotels as it negatively impacts customers on a regular basis.
It’s interesting to note that the NRAI has also clarified that service fees charged by restaurants are entirely legal and that the Department of Consumer Affairs has not yet decided whether to adopt the new framework, despite rumours to the contrary.
Major restaurant associations noted that, when a service charge is included on the menu, the customer is deemed to have given their implied permission to pay the fee. Service fees are not added to the price of the dining or lodging experience; rather, they are used by restaurants and hotels to pay their staff and employees.
NRAI President Kabir Suri said levying service charge is “neither illegal, nor an unfair trade practice as alleged, and this debate in public domain is creating unnecessary confusion and disruption in smooth operations of restaurants.”
(With agency inputs)
