Restaurants cannot force customers to pay service charge: Govt

Restaurants have been warned against forcing customers to pay service charge by default, even though the collection of any such charge is voluntary, at the discretion of consumers and not mandatory as per law.

The warning came after the Department of Consumer Affairs took note of a large number of complaints lodged on the National Consumer Helpline pertaining to this issue following which it shot off a National Restaurant Association of India (NRAI).

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The letter notes that consumers are forced to pay the service charge, often fixed at arbitrarily high rates by restaurants. It further states that restaurants have been falsely misleading consumers on the legality of such charges. There have also been instances restaurants have harrassed customers when they request the removal of such charges from the bill amount. 

The department feels it is necessary to examine the issue with closer scrutiny and detail since the issue impacts consumers at large on a daily basis and has majorly impacts the rights of consumers, the letter by Rohit Kumar Singh, Secretary at the Department of Consumer Affairs, said.

The Department of Consumer Affairs has scheduled a meeting on June 2, 2022, with the NRAI to discuss the issues pertaining to service charge levied by restaurants. Among the issues that would be taken up in this meeting includes the suppression of information from consumers that paying service charges is optional and voluntary.

The Department of Consumer Affairs noted that it had, on April 21, 2017, published guidelines on charging service charge by hotels and restaurants. 

The guidelines, make it clear that a customer's entry into a restaurant cannot by itself be construed as a consent to pay a service charge. And if the customer is forced to pay the service charge as a condition per cent to placing an order amounts to 'restrictive trade practice' under the Consumer Protection Act. The guidelines clearly mention that placing an order by a customer amounts to his/her agreement to pay the prices displayed on the menu card along with the applicable taxes. 

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• Department of Consumer Affairs
• Govt
• NRAI
• National Restaurant Association
• Restaurants
• bill amount
• customers
• guidelines
• law
• service charge