41 eateries face CCPA probe over mandatory service charges

The Central Consumer Protection Authority (CCPA) initiated suo motu action against 41 restaurants for levying service charge by default. The action was taken based on consumer complaints received through the National Consumer Helpline (NCH). The CCPA found that automatic levy of service charge violated guidelines and issued a final order against Chaayos, imposing a penalty of ₹50,000.

Source

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Quick Revision

Prelims-testable facts

01The Central Consumer Protection Authority (CCPA) has initiated suo motu action against 41 restaurants for levying service charge by default.
02The action is based on complaints received through the National Consumer Helpline (NCH).
03The CCPA found that the automatic levy of service charge violated the Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants.
04The Hon'ble High Court of Delhi upheld the validity of the CCPA's Guidelines on Service Charge in its judgment dated 28 March 2025.
05Section 2(47) of the Consumer Protection Act, 2019 defines an unfair trade practice as any act or omission which causes or is likely to cause any loss to a consumer.
06The Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants were issued on 4 July 2022.
07Chaayos (Sunshine Teahouse Pvt. Ltd.) was fined ₹50,000 for levying service charge by default and directed to reimburse the service charge collected from the consumer.

Trap alerts

Most people think that service charges can be automatically added to bills without customer consent, but actually, it is an unfair trade practice under Section 2(47) of the Consumer Protection Act, 2019.
Most people think that the CCPA's Guidelines on Service Charge are optional for restaurants, but actually, they are mandatory and must be complied with as per the Delhi High Court judgment dated 28 March 2025.

Prelims Practice MCQs

Single facteasy

How many restaurants were found to be levying service charge by default?

A.41
B.31
C.51
D.71

The Central Consumer Protection Authority (CCPA) initiated suo motu action against 41 restaurants for levying service charge by default.

Multiple statementsmedium

Consider the following statements regarding CCPA's Action Against Restaurants: 1. The CCPA initiated suo motu action against 100 restaurants for levying service charge by default. 2. The action was taken based on consumer complaints received through the National Consumer Helpline (NCH). 3. The CCPA found that automatic levy of service charge violated the Guidelines to Prevent Unfair Trade Practices and Protection of Consumer Interest with Regard to Levy of Service Charge in Hotels and Restaurants. How many of the above statements are correct?

A.Only one
B.Only two
C.All three
D.None

Statement 1 is incorrect because the fact list states that CCPA initiated suo motu action against 41 restaurants. Statement 2 is correct as it aligns with fact 2. Statement 3 is correct as it aligns with fact 3.

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