The Union government issued new guidelines on July 4 to deem it illegal for restaurant and hotels to levy a service charge without the express consent of a diner.
- The order has been issued under Section 18 (2) (I) of The Consumer Protection Act, 2019.
- The practice of levying service charges by default has now been defined as an unfair trade practice by the Central Consumer Protection Authority (CCPA), a regulatory body set up in 2019.
What are the guidelines?
- The guidelines issued by CCPA stipulate that hotels or restaurant shall not add service charge automatically or by default in the food bill.
- No collection of service charge shall be done by any other name.
- No hotel or restaurant shall force a consumer to pay service charge and shall clearly inform the consumer that service charge is voluntary, optional and at consumer’s discretion.
- People cannot by denied entry based on whether or not they consent to such charges and the amount cannot be collected by adding it along with the food bill and levying GST on the total amount.
If service charges are added to their bill, the consumer has four recourses as per CCPA rules:
- First, they can ask the hotel or restaurant to remove the service charge from the bill amount.
- Second, they can lodge a complaint on the National Consumer Helpline (NCH) by calling 1915. The NCH works as an alternate dispute redressal mechanism at the pre-litigation level.
- Third, the consumer can complain to the Consumer Commission, or through the e-daakhil portal, http://www.edaakhil.nic.in.
- Fourth, they can submit a complaint to the District Collector of the concerned district for investigation and subsequent proceedings by the CCPA.
The CCPA guidelines now mean this will be enforceable since the authority has the power to levy penalties and order an investigation by the district collector or the local police into any unfair trade practice.
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