CCPA Penalizes 27 Restaurants for Mandatory Service Charge Levy
Overview
The Central Consumer Protection Authority (CCPA) has fined 27 restaurants up to ₹50,000 and ordered refunds for illegally levying mandatory service charges. This action enforces consumer rights against unfair trade practices, bolstered by recent court rulings upholding CCPA guidelines that prohibit default service charges. The watchdog is continuing to monitor compliance.
The Central Consumer Protection Authority (CCPA) has launched a significant regulatory crackdown, taking suo motu action against 27 restaurants across India for mandatorily levying service charges on customers. This move declares the practice a direct violation of consumer rights and unfair trade practices under the Consumer Protection Act, 2019. Penalties include fines up to ₹50,000 and mandatory refunds of illegally collected charges.
Regulatory Crackdown
The authority acted upon complaints received via the National Consumer Helpline, which highlighted invoices showing an automatic 10% service charge addition. Investigations confirmed that establishments like Cafè Blue Bottle in Patna and China Gate Restaurant Pvt Ltd (Bora Bora) in Mumbai were defaulting to this practice. Such mandatory levies are explicitly barred by CCPA guidelines issued in July 2022, which prohibit automatic charges, collection under disguised names, and denial of service to customers who refuse to pay.
Legal Precedent and Enforcement
The CCPA's enforcement is bolstered by recent rulings from the Delhi High Court. The court has unequivocally upheld the CCPA’s guidelines on service charges, stating that mandatory collection constitutes an unfair trade practice and is contrary to law. It also affirmed the CCPA's full authority to enforce these regulations. The CCPA has stated its intent to remain vigilant, continuously monitoring complaints and taking strict measures against any restaurant found non-compliant, thereby safeguarding consumer interests nationwide.
