Following the complaints about the wrongful collection of service charges by hotels and restaurants, the Department of Consumer Affairs (DoCA) on Thursday, June 2, decided to come up with a robust framework to ensure strict compliance with rules related to levying of service charges. In a meeting chaired by Rohit Kumar Singh, Secretary, DoCA, restaurant associations, and consumer organisations were part of the discussions on the levy of service charge in hotels and restaurants.
According to an official release, major restaurant associations including the National Restaurant Association of India (NRAI) and the Federation of Hotel & Restaurant Associations of India (FHRAI) and consumer organizations attended the meeting.
It is learned that major issues raised by the consumers on the National Consumer Helpline of DoCA relating to service charge were discussed in the meeting. Further, guidelines on fair trade practices related to the charging of service were also referred to.
The restaurant associations observed that consent of the consumer to pay the service charge is needed when a charge is mentioned on the menu. Restaurants/hotels don't charge service charges for the experience or food served to consumers and are used by restaurants/hotels to pay the staff and workers.
The Union Consumer Affairs, Food and Public Distribution Ministry said in a statement, "According to 2017 guidelines, charging for anything other than prices displayed on the menu card along with the applicable taxes, without the express consent of the customer, is unfair trade practices”.
It was further observed that levying service charges is patently arbitrary and under the Consumer Protection Act, it is an unfair as well as restrictive trade practice. The service charge is detrimental to the rights of consumers since there is no bar on restaurants/hotels fixing their food prices.
In April 2017, the Department of Consumer Affairs had already published a series of guidelines pertaining to hotels or restaurants charging service charges. According to the guidelines, the entry of a customer into a restaurant cannot by itself be construed as a consent to pay service charges. It further mentioned that restriction on entry on the consumer by way of forcing her/him to pay service charges as a condition is noted under the Consumer Protection Act.
In addition, it also states that placing an order by a customer reflects his/her agreement to pay the prices on the menu card, and so charging an additional price in name of service charge without consumers' consent will amount to unfair trade practices.
While the consumers have the right to approach a Consumer Disputes Redressal Commission seeking redressal concerning this matter.