CCPA IN ACTION: Regulatory Crackdown on Restaurants for Illegal Service Charges
The Central Consumer Protection Authority (CCPA) has initiated a significant regulatory crackdown on the hospitality sector, taking strict action against establishments found levying service charges in violation of consumer rights. This move reinforces the mandate that any additional “service” fee is entirely discretionary and cannot be treated as a mandatory tax.
In a recent pan-India operation, the CCPA penalized 27 establishments across the country. This enforcement highlights a zero-tolerance policy toward “unfair trade practices” that have become common in the dining industry.
Key Regulatory Directives
The CCPA has reiterated its guidelines to ensure that consumers are not misled or coerced into paying extra fees. The primary focus of the crackdown includes:
Mandatory Inclusion Prohibited: Restaurants are strictly forbidden from automatically adding service charges to the food bill.
Voluntary Contribution: Any payment beyond the food price and applicable taxes (GST) is strictly at the consumer’s discretion.
Transparency Requirements: Establishments must clearly communicate that the service charge is optional. Concealing this information or presenting it as a compulsory fee is a legal violation.
Guidelines for Consumers
Diners in Odisha and throughout India should remain vigilant regarding their billing:
Review the Invoice: Before making a payment, verify if a “Service Charge” has been added. Do not confuse this with GST, which is a statutory requirement.
Exercise the Right to Refuse: If a service charge is included without your consent, you have the legal right to demand its removal.
Formal Grievance Redressal: If an establishment refuses to comply or insists on the charge, consumers can lodge a formal complaint via the National Consumer Helpline (NCH) by calling 1915 or by using the NCH mobile app.
This nationwide action serves as a directive for the hospitality industry in Odisha to align their billing practices with the Consumer Protection Act, 2019.
Compliance: Establishments must ensure that no service charge is pre-printed on the bill.
Consequences of Violation: Non-compliance can lead to heavy financial penalties, legal proceedings, and significant damage to the brand’s professional reputation.
