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Explained: What are the new guidelines against service charge and what you can to if its added to your bill

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New Delhi, July 05: The Central Consumer Protection Authority (CCPA) on Monday issued guidelines to prevent unfair trade practices with regard to the levy of service charge in restaurants and hotels.

The consumer can lodge a complaint against hotels and restaurants by calling the number 1915 the guidelines say. The CCPA was established under The Consumer Protection Act 2019 in the year 2020.

Explained: What are the new guidelines against service charge and what you can to if its added to your bill

The intent was to enforce the the rights of the consumers as a class and also investigate, prosecute and punish violators.

The CCPA issued the 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.

The five guidelines issued by the CCPA are as follows:

  1. No hotel or restaurant shall add service charge automatically or by default in the bill.
  2. 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.
  3. Service charge shall not be collected from consumers by any other name.
  4. Service charge shall not be collected by adding it along with the food bill and levying GST on the total amount.
  5. No restriction on entry or provision of services based on collection of service charge shall be imposed on consumers.

In case of a violation, here is what a consumer can do:

  • In case a consumer spots the levy of a service charge he or she can first make a request to the hotel or restaurant to remove the service charge from the bill.
  • Second, the consumer can lodge a complaint the National Consumer Helpline (NCH) which works as an alternative dispute redressal mechanism at the pre-litigation level. The consumer can lodge the complaint by calling 1915 or on the NCH mobile application.
  • The third option is complain to the Consumer Commission or through the edaakhil portal.
  • The fourth option would be to submit a complaint to the District Collector of the concerned district for investigation and subsequent proceedings by the CCPA. The consumer can complain directly to the CCPA by sending an e-mail to com-ccpa@nic.in.

Why were the guidelines issued:

There were several complaints about restaurants and hotels levying service charge by default, without asking the consumer about it.

On June 2, the Department of Consumer Affairs under the Ministry of Consumer Affairs, Food and Distribution held a meeting with the restaurant associations and consumer organisations regarding the levy of service charges in hotels and restaurants.

Following the meeting the department announced that the Centre would soon issue guidelines. A day later, Union Minister of Consumer Affairs, Food and Distribution, Piyush Goyal said that restaurants and hotels cannot ask consumers to pay hidden charges.

During a press conference held on June 3, Goyal said, "you (restaurants) can raise wages of your workers by raising rates. There is no bar on that. We would welcome it if they raise their employees' wages. They are free to increase the wages of their employees and they are free to charge any rate."
He also said that a charge cannot be levied by deceit. When some of them do and some do not, how will people know what the real price is, Goyal also said.

During the meeting held on June 2 the representatives of the hotel and restaurant industry told the Centre that the levy of service charges is a matter of individual policy. There is no illegality in levying such a charge. They also said that service charge brings in revenue to the government since there is a tax paid on it.

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