India's CCPA Fines 41 Restaurants Over Mandatory Service Charges

The Central Consumer Protection Authority (CCPA) has initiated action against 41 restaurants across India for automatically adding a service charge to customer bills, a practice the regulator calls an unfair trade practice under the Consumer Protection Act, 2019.

“Such practice amounts to an unfair trade practice under Section 2(47) of the Consumer Protection Act, 2019,” the CCPA said in a press release on 19 July. The investigation was triggered by complaints to the National Consumer Helpline (NCH), which submitted invoices showing the charge had been added without explicit consent.

The CCPA found that restaurants had violated its “Guidelines to prevent unfair trade practices and protection of consumer interest with regard to levy of service charge in hotels and restaurants,” first issued on 4 July 2022.

In one case, the authority imposed a ₹50,000 penalty on Chaayos (Sunshine Teahouse Pvt. Ltd) for adding a service charge by default. The CCPA also directed the company to reimburse the service charge collected from the consumer and “to modify its software-generated billing system across all its outlets to ensure that service charge or any similar charge is not added automatically to consumers' bills,” the release said.