Govt miffed with restaurants over ‘forced’ service charges

The central government has expressed its displeasure over restaurants allegedly making service charges compulsory even though such charges are subject to the customer’s discretion. Taking cognisance of the grievances registered by consumers on the National Consumer Helpline (NCH) as well as several media reports on the matter, the Department of Consumer Affairs (DoCA) has called the National Restaurants Association of India (NRAI) on June 2 to discuss the issue.

In a letter addressed to the restaurant body, DoCA secretary Rohit Kumar Singh points out that restaurants and eateries are collecting service charge from consumers by default, even though collection of any such charge is voluntary, at the discretion of consumers, and not mandatory as per law, a government statement reads.

The letter points out that the consumers are forced to pay service charges, often fixed at arbitrarily high rates by restaurants. It mentions that 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,” says the statement by the Ministry of Consumer Affairs.

“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,” the letter further adds.

During the meeting between DoCA and NRAI next month, the government and restaurants will discuss service charge being presented as compulsory, addition of service charge in the bill in the guise of some other fee or charge, suppressing from consumers service charge is optional and voluntary, and embarrassing consumers in case they resist from paying service charge.

The ministry, in its statement, mentions that the DoCA has already published guidelines, dated April 21, 2017, on charging of service charge by hotels and restaurants. The guidelines note that entry of a customer in a restaurant itself cannot be construed as consent to pay service charge.

Any restriction on entry of consumers by way of forcing them to pay service charge amounts to ‘restrictive trade practice’ under the Consumer Protection Act, the ministry further states.

The guidelines clearly mention that placing an order by a customer amounts to their agreement to pay the prices displayed on the menu card along with the applicable taxes. Charging for anything other than the aforementioned charges without express consent of the customer would amount to unfair trade practice as defined under the Act, the statement says.

As per the guidelines, a customer is entitled to exercise their rights as a consumer to be heard and redressed under provisions of the Act in case of unfair or restrictive trade practices. Consumers can approach a consumer disputes redressal commission of appropriate jurisdiction for this purpose.