Service Charge Is Optional, Restaurants Can't Force Customers To Pay, Says Centre

New Delhi: Service charges in restaurants are supposed to be optional and ideally, customers should have a choice in the matter. However, some restaurants seem to think that they are entitled to it and have a divine right to extract the service charge from their customers.

To limit this practice, the Union government on May 23 issued a stern warning to the restaurants by saying that they cannot force customers to pay service charges and the centre reminded them that the collection of service charges is voluntary and is not mandated by law.

The Department of Consumer Affairs (DoCA) said that it has taken cognizance of media reports as well as grievances registered by consumers on the National Consumer Helpline (NCH) that restaurants are collecting service charges by default.

A meeting will be held between the Department of Consumer Affairs and the National Restaurant Association of India on June 2, 2022 to discuss issues relating to service charges.

The DoCa has written to the restaurant association noting that consumers are forced to pay a service charge which is fixed arbitrarily by restaurants.

It is mentioned in the letter that the restaurants are charging anywhere between 5-10%, and service charge is often treated as mandatory rather than optional. The letter went on to say that consumers are being misinformed on the legality of such a charge and are harassed when they request that the amount be removed.

"Since this issue impacts consumers at large on a daily basis and has significant ramifications on the rights of consumers, the department construed it necessary to examine it with closer scrutiny and detail," the letter added.

The complaints that would be discussed during the meeting with the restaurant body includes the likes of service charge being made compulsory by restaurants, adding service charge in a bill in disguise of some other fee or charge, and suppressing from customers that the charge is voluntary and not mandatory and embarrassing consumers in case they resist paying.

The department also accentuated the guidelines published in 2017, which state that the customer entering the restaurant cannot imply consent to pay a service charge.

"Any restriction on entry on the consumer by way of forcing her/him to pay the service charge as a condition per cent to placing an order amount to 'restrictive trade practice' under the Consumer Protection Act," the statement said. 

It asserted that the customer has to pay the prices on the menu card along with the applicable taxes and charging anything else without the prior approval of a customer can amount to an unfair trade practice as per the Consumer Protection Act.

Consumer can exercise their rights and approach a Consumer Disputes Redressal Commission in the case of restrictive trade practices.

Meanwhile, the department's letter came in the wake of a restaurant in Hyderabad being forced to refund the service charge as well as pay up to a customer who tried to get the service charge removed but was not allowed to.

A complaint was filed by a Hyderabad-based advocate and the district consumer forum directed the restaurant to refund the complainant and said that service charges must be optional.

Also read: BAMCEF Announces Bharat Bandh On May 25, Here's Why?

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