The new guidelines against ‘service charge’

The Central Consumer Protection Authority (CCPA) recently 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.

The guidelines:

• 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. These are:
  • No hotel or restaurant shall add service charge automatically or by default in the bill;
  • Service charge shall not be collected from consumers 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 the consumer’s discretion;
  • No restriction on entry or provision of services based on collection of service charge shall be imposed on consumers; and
  • Service charge shall not be collected by adding it along with the food bill and levying GST on the total amount.
• Under the guidelines, consumers can lodge complaints against hotels and restaurants by calling the number 1915 or on the National Consumer Helpline (NCH) mobile app.
• The consumer can complain to the Consumer Commission, or through the edaakhil portal.
• A consumer can submit a complaint to the District Collector of the concerned district for investigation and subsequent proceedings by the CCPA.
• A consumer can complain directly to the CCPA by sending an e-mail to com-ccpa@nic.in.

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 Centre’s 2017 guidelines which prohibit the levy of service charge on consumers by hotels and restaurants.

About Central Consumer Protection Authority (CCPA):

• 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 authority is being constituted under Section 10(1) of The Consumer Protection Act, 2019.
• Aim: To protect the rights of the consumer by cracking down on unfair trade practices, and false and misleading advertisements that are detrimental to the interests of the public and consumers.
• It will be headquartered in the National Capital Region of Delhi but the central government may set up regional offices in other parts of the country.
• The objective of the Central Consumer Protection Authority (CCPA) is to promote, protect and enforce the rights of consumers as a class.
• It will be empowered to conduct investigations into violation of consumer rights and institute complaints / prosecution,
  • order recall of unsafe goods and services, order discontinuation of unfair trade practices and misleading advertisements,
  • impose penalties on manufacturers/endorsers/publishers of misleading advertisements.
• Composition: It will have a Chief Commissioner as head, and only two other commissioners as members, one of whom will deal with matters relating to goods while the other will look into cases relating to services.
• The CCPA will have an Investigation Wing that will be headed by a Director General.
• District Collectors too, will have the power to investigate complaints of violations of consumer rights, unfair trade practices, and false or misleading advertisements.