Service Charge: The Department of Consumer Affairs (DOCA) will soon come out with a robust framework for strict compliance by the stakeholders concerning the service charges levied by restaurants and hotels, as it adversely affects the consumers daily. A meeting was held with restaurant associations and consumer organizations regarding levying service charges in hotels and restaurants by the department.
The meeting was attended by leading restaurant associations and consumer organizations including the National Restaurant Association of India (NRAI), Federation of Hotel and Restaurant Association of India (FHRAI), and Mumbai Grahak Panchayat, Pushpa Girimaji.
During the meeting, the major issues raised by the consumers on the National Consumer Helpline regarding service charges, such as compulsorily levying service charges, automatic addition of service charges without the consent of the consumers, concealment of the fact That such charges are optional and voluntary but issues such as shaming and suppressing consumers if they resist paying such charges were discussed. In addition, guidelines on Fair Trade Practices published by DOC on 21.04.2017 relating to levy of service charges by Hotels/Restaurants were also mentioned.
Restaurant Associations observed that when service charges are mentioned on the menu, it also includes the implied consent of the consumer to pay the fee. The service fee is used by the restaurant/hotel to pay the staff and workers and is not levied for the experience or food served by the restaurant/hotel to the consumer.
The consumer organizations observed that the levy of service charges is completely arbitrary and promotes an unfair and restrictive trade practice under the Consumer Protection Act. Questioning the validity of such charges, it was highlighted that since there is no bar on fixing charges for their meals in restaurants/hotels, Therefore, levying additional charges in the name of service charges is a violation of the rights of the consumers.
As stated in the earlier guidelines published by DOC on 21.04.2017, informing a customer to pay the prices in the menu along with applicable taxes amounts to an agreement in itself. Charges for anything other than the above, without the express consent of the consumer, shall be treated as unfair trade practice under the Act.
Further, treating the customer's entry into a restaurant/hotel as implied consent to pay the service fee, would amount to the imposition of undue service charge on the customer as a condition only from ordering the food and prohibitory trade under the Act. will be included in the exercise.
As this adversely affects lakhs of consumers daily, a robust framework will be put in place by the department at the earliest to ensure strict compliance from the stakeholders.