Restaurants are fooling you: Customers can refuse to pay ‘service charge’, never mind the signboard

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Published: April 25, 2018 4:29:03 PM

Many restaurants are still adding the service charge between 5% and 20% in the bill without customers' consent. Notably, as many as 36% of the consumers end up paying the service charge unknowingly.

Restaurants are fooling you: Customers can refuse to pay 'service charge', never mind the signboard‘It is totally up to the consumer to pay, or not pay, or by how much, and only if they like the service.’ (Image: IE)

A year ago, the Consumer Affairs Ministry clarified that the ‘service charge’ levied by restaurants and hotels is “voluntary” and customers can refuse to pay it altogether or pay only to the extent they wish to pay. Yet, many restaurants are still adding the service charge between 5% and 20% in the bill without customers’ consent. Notably, as many as 36% of the consumers end up paying the service charge unknowingly, while only 10% get it removed, a survey shows.

What the government said was a directive and not a law; so it is not totally illegal for restaurants to add the service charge in the bill. However, if you decide to stand up and get it removed from the bill, they cannot refuse.

In many cases, some restaurants put up a signboard or a disclaimer on the menu that they ‘levy service charge’, in order to be able to refuse customers’ request. But, even in such cases, customers have the right to not pay the service charge, a Consumer Affairs Ministry official told FE Online pointing to the last year’s guidelines.

“Many restaurants are still adding a service charge in the bill and forcing the customers to pay it,” a survey conducted by LocalCircles said. While the number of people who are not paying this service charge is increasing month-on-month but still is very low. A survey of 8,013 consumers showed that as many as 36% did not know that they were paying for service charge as well in the final bill amount and about 27% paid them anyway.

“Many consumers don’t want to pick a fight where they have gone with family to have a good time, so they just pay it. It’s sad that despite clear directive, there could still be a fight or heated argument. I think once the new Consumer Protection Bill is passed, there will be more clarity,” Sachin Taparia of LocalCircles said.

“It is totally up to the consumer to pay, or not pay, or by how much, and only if they like the service. And right now, more awareness is required,” he added.

What Consumer Affairs Ministry guideline says:

  • It’s your choice. The guideline clearly mentioned that a consumer will be in a position to take the decision whether or not he/she is willing to pay the service charge only after availing the service. The assumption that the entry of a consumer into a restaurant amounts to consent to pay the service charge is “not correct”.
  • It also said that a customer is liable to pay only the prices displayed on the menu card along with applicable taxes. Any other charge besides these without “consent” is unfair trade practice.
  • The price of a product (food) covers both goods and service components.

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