According to Consumer Affairs Secretary Rohit Kumar Singh on Thursday, the government would soon introduce legislation to prohibit restaurants from charging customers a service fee since the practise is “unfair.”
Singh stated that although the associations say the practise is lawful, the Department of Consumer Affairs is of the opinion that it negatively affects the rights of the customers and is a “unfair trade practise” after meeting with representatives of associations of restaurants and consumers.
As said by Singh to PTI, “We will soon work on a legal framework because there were guidelines of 2017 which they have not enforced. The guidelines are not generally legally enforceable.”
NRAI, FHRAI, and consumer groups including Mumbai Grahak Panchayat and Pushpa Girimaji were represented at the conference along with officials from the National Restaurant Association of India (NRAI).
It will be legally required of them to halt this practise under a legal framework. He said that customers frequently mistake service tax for a service charge and end up paying.
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According to a formal announcement, significant problems brought up by customers on the department’s National Consumer Helpline were considered at the meeting.
These issues included obligatory service charges, adding the fee without the customer’s express agreement, hiding the fact that the fee is optional and voluntary, and humiliating customers who refuse to pay the fee.
The announcement questioned the validity of such a fee and emphasised that while there is no restriction on restaurants and hotels setting their meal pricing, adding a fee under the guise of a service charge is damaging to customers’ rights.
A restaurant charging a service charge is not against the law nor unlawful, according to FHRAI, who stated this at the conference.
It was further clarified that a service fee is a component of the invitation sent by a restaurant to potential guests, just like any other fee that is collected by a business. Customers must choose whether or not to dine at the restaurant, the FHRAI stated in a separate statement.
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