NRAI rejects reports that government calls restaurant service charges illegal, Retail News, ET Retail

New Delhi: The National Restaurant Association of India (NRAI) on Friday refuted reports that the government had called service charges illegal and hit industry bodies in a meeting.

The Department of Consumer Affairs held a meeting, chaired by Consumer Secretary Rohit Kumar Singh, here on Thursday with restaurant associations and consumer organizations on the issue of service charges in hotels and restaurants.

“Media reports of decisions allegedly made at the Department of Consumer Affairs meeting yesterday regarding the legality of the service charge are false,” the hospitality industry body said.

“The department has heard the views of all stakeholders and will consider all input before making a decision on the matter. Until final elimination, service fees are still entirely legal,” a- he said in a statement.

The government will soon come up with a robust framework to ensure strict compliance by stakeholders with service charges levied by restaurants and hotels, as they affect millions of consumers daily.

The meeting was attended by representatives from National Restaurant Association of India (NRAI), Federation of Hotel and Restaurant Associations of India (FHRAI) and consumer organizations including Mumbai Grahak Panchayat and Pushpa Girimaji.

Representatives of major restaurant associations including NRAI, Federation of Hotel and Restaurant Associations of India (FHRAI) and consumer organizations and activists including Mumbai Grahak Panchayat, Pushpa Girimaji among others were present at the meeting.

During the meeting, major issues raised by consumers on the Department’s National Consumer Hotline regarding service charges, such as the mandatory collection of service charges, the addition of default charges without the express consent of the consumer, the removal of the fact that such charges are optional and voluntary, and embarrassing consumers if they resist paying such a charge, among others, were discussed.

NRAI said that information regarding the amount of service charge is clearly mentioned/displayed by restaurants on their menu cards and also displayed at the premises, so that customers are well aware of these charges before availing the services. .

Once a customer is informed of such charges in advance and then decides to place the order, it becomes an agreement between the parties and does not constitute an unfair trade practice, he said.

However, consumer organizations have observed that the charging of service charges is patently arbitrary and constitutes an unfair and restrictive business practice under consumer protection law.

It was pointed out that since nothing prevents restaurants/hotels from setting their food prices, the inclusion of an additional charge in the name of service charges is detrimental to consumer rights.

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