The new guidelines against ‘service charge’, and what you can do if a restaurant adds it to your bill

The CCPA took cognizance of grievances regarding restaurants and hotels levying service charge by default, without first asking or informing consumers. The Indian Express SPECIAL JULY 4 PRICING - Only for our international readers, monthly pricing starting just 7 cents a day click here

Home Explained: The new guidelines against 'service charge', and what you can do if a restaurant adds it to your bill explained: The new guidelines against ‘service charge’, and what you can do if a restaurant adds it to your bill The CCPA was established in July 2020 under The Consumer Protection Act, 2019, to promote, protect, and enforce the rights of consumers as a class, and to investigate, prosecute, and punish violators.

The CCPA took cognizance of grievances regarding restaurants and hotels levying service charge by default, without first asking or informing consumers. (Express Photo: Praveen Shanna, File)

The Central Consumer Protection Authority (CCPA) on Monday issued guidelines to prevent unfair trade practices, and to protect the interest of consumers with regard to the levy of service charge in hotels and restaurants.

Under the guidelines, consumers can lodge complaints against hotels and restaurants by calling the number 1915.

The CCPA was established in July 2020 under The Consumer Protection Act, 2019, to promote, protect, and enforce the rights of consumers as a class, and to investigate, prosecute, and punish violators.

The CCPA has issued five major guidelines regarding the levy of service charge by restaurants and hotels, which has for long been a contentious issue and has periodically triggered complaints from consumers.

The CCPA has issued five major guidelines regarding the levy of service charge by restaurants and hotels, which has for long been a contentious issue and has periodically triggered complaints from consumers. The guidelines say:

Under which law have these guidelines been issued?

The CCPA has issued guidelines under Section 18 (2) (I) of The Consumer Protection Act, 2019.

The guidelines are in addition to the Center’s 2017 guidelines which prohibit the levy of service charge on consumers by hotels and restaurants, and terms the charging of anything other than “the prices displayed on the menu card along with the applicable taxes” without “express consent” of the customer as “unfair trade practices”.

What do restaurants and hotels say?

During the June 2 meeting, representatives of the hotel and restaurant industry told the Center that the levy of service charge by a restaurant is a “matter of individual policy”. There is “no illegality in levying such a charge”, they said.

They also said that service charge brings in revenue to the government, since tax is paid on it.

On June 2, the Department of Consumer Affairs under the Ministry of Consumer Affairs, Food & Public Distribution, held a meeting with restaurant associations and consumer organizations on the levy of service charge in hotels and restaurants.

After the meeting, the department announced that the Center would soon release a “robust framework” to ensure strict compliance of its 2017 guidelines, which prohibited the levy of service charge. A day later, Union Minister of Consumer Affairs, Food and Public Distribution Push Royal said restaurants cannot ask customers to pay hidden charges.