Service charge remains a default levy by restaurants; 43% forced to pay, shows survey

Customers in India tip restaurant waiters as a token of appreciation for their services. It has always been optional in India. However, over the past five years restaurants have been adding service charge by default to the bill, making it a forced payment instead of optional.

A survey conducted by LocalCircles, a community social media platform has revealed that 43% consumers in India are still being billed service charges in the past three months. Out of this only 9% manage to remove them after asserting their rights. This despite the guidelines issued by the Central Consumer Protection Authority (CCPA) in 2022.

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The survey included over 11,000 citizens from 303 districts across India. 66% respondents were men and 34% were women. 47% respondents came from tier-1 cities, 36% from tier 2 and 17% from tier 3, 4 and rural districts.

The survey also noted that though there has been an improvement in the situation, the consumers are still being exploited. Their July 2022 survey revealed that 71% respondents had been forced to pay service charges in the last five years as it was included in the bill though the service was unsatisfactory. Among the respondents, 23% had stated it happened once or twice, 18% said it happened three to five times and 24% respondents revealed it had happened as many as six to 10 times, while it happened more than 10 timed to 6% of the respondents.

The CCPA in July 2022 had said that restaurants are prohibited from adding service charges automatically to the bills. However, Delhi HC had stayed the CCPA's guidelines temporarily and urged the Industry stakeholders to take a lead in the matter. This has put consumers in a fix as they are made to pay service charges forcefully even if the service is not satisfactory.

The survey has also revealed that consumers are expecting the service charge bill to come with options for the them to consent, fill, or check the box instead of being a forceful one.