Many high-end restaurants and hotels charge customers a service fee for their services. Many individuals pay these extra prices freely when they are happy with the restaurant or hotel’s service.
Customers are occasionally forced to pay service costs by the establishment, even if they are dissatisfied with the services. But did you know that, according to government rules, paying service charges is only voluntary if the consumer is satisfied with the service provided?
The Central government convened a conference of restaurant owners on Monday to discuss the problem of service charges imposed by restaurants on their customers. The meeting with the National Restaurant Association of India has been scheduled for June 2, 2022, by the Department of Consumer Affairs (DoCA) of the Ministry of Consumer Affairs, Food and Public Distribution. The meeting will cover “problems connected to service charges assessed by restaurants,” according to a statement released by the government.
This comes in the wake of media reports as well as grievances registered by consumers on the National Consumer Helpline (NCH) about restaurants and eateries collecting service charges from consumers by default. The government also referred to the guidelines issued in April 2017 and reiterated that payment of ‘service charge’ at restaurants is voluntary and at the discretion of consumers.
Government’s Guidelines On Service Charges
• In April 2017, the DoCA issued guidelines to hotels/restaurants on service charges. The guidelines note that entry of a customer in a restaurant cannot, by itself, be construed as a consent to pay the service charge and any restriction on entry on the consumer by way of forcing them to pay the service charge as a condition per cent to placing an order amount to ‘restrictive trade practice’ under the Consumer Protection Act.
• Instead, the bill “may clearly display that service charge is voluntary, and the service charge column of the bill may be left blank for the customer to fill up before making payment,” the guidelines say.
• The guidelines state that a component of service is inherent in the provision of food and beverages ordered by a customer, and therefore the pricing of the product is expected to cover both the goods and service components.
• As per the guidelines, placing of an order by a customer amount to his/her agreement to pay the prices displayed on the menu card along with the applicable taxes, and charging for anything other than the afore-mentioned, without express consent of the customer, would amount to unfair trade practice as defined under the Act.
• As per the guidelines, a customer is entitled to exercise their rights as a consumer to be heard and redressed under provisions of the Act in case of unfair/restrictive trade practices. Consumers can approach a Consumer Disputes Redressal Commission/Forum of appropriate jurisdiction.
• It says that when a customer places an order, it amounts to their agreement to pay the prices displayed on the menu card along with the applicable taxes, charging for anything other than these without the customer’s express would amount to unfair trade practice as defined under the Consumer Protection Act, 1986.
• The guidelines note that if a customer pays any tip or gratuity towards hospitality received beyond the basic minimum service already contracted between them and the hotel management, then “it is a separate transaction between the customer and the staff of the hotel or restaurant, which is entered into, at the customer’s discretion.”
• It further notes that customer is in a position to assess the quality of service only after completing their meal and then decide whether to pay a tip and how much.