Guidelines to Prevent Unfair Trade Practices

Why in the News?

The Central Consumer Protection Authority (CCPA) released five guidelines to prevent unfair trade practices and to safeguard consumer interests regarding the levy of service charges in hotels and restaurants.

• The CCPA has taken cognisance of various complaints that were registered on the National Consumer Helpline (NCH) related to the needless levying of service charges in the bill.

About Central Consumer Protection Authority (CCPA):

• It was established in accordance with the 2019 Consumer Protection Act (CPA), to address matters related to the breach of the rights of consumers.
• The CCPA has jurisdiction under section 18 of the CPA, 2019 to protect, promote and uphold the rights of the consumers and prohibit violation of their rights under the Act.

What is a service charge?

• It is a charge made to pay for services associated with the purchase of a product or service.
• It is collected by hospitality and food and beverage industries as a fee for serving customers.

What are the new Guidelines ?

• Hotels or restaurants are prohibited from levying extra charges automatically or by the default in the bill.
• The service charge shall not be charged from consumers by any other name.
• They are not allowed to force service charges, and must clearly inform the consumers that service charges are voluntary and optional.
• No restriction on entry or provision of services based on collection of service charge shall be levied on consumers.
• Service charge cannot be collected by adding it along with the food bill and levying GST on the total bill amount.

What are the redressal mechanisms?

• consumer may lodge a complaint on the National Consumer Helpline (NCH) by calling 1915 or through the NCH mobile app.