CCPA imposes ₹1 lakh fine on Shangri-La Eros Hotel for unfair trade practice of auto-applying service charges, violating Delhi HC precedent affirming voluntary consumer consent.
The Central Consumer Protection Authority (CCPA) has levied a ₹1 lakh penalty on Shangri-La Eros Hotel in New Delhi for automatically adding service charges to restaurant bills, a practice deemed unfair and manipulative under the Consumer Protection Act, 2019. A bench comprising Chief Commissioner Nidhi Khare and Commissioner Anupam Mishra held that forcing customers to opt out breaches consumer rights.
The ruling cites a prior Delhi High Court decision which clarified that service charges are voluntary and not implied tips or mandatory fees. The hotel’s practice of embedding charges by default — placing the onus on customers to notice and request removal — was found to exploit consumer inertia and lack of awareness.
"Default inclusion shifts the burden unfairly to consumers and constitutes unfair trade practice."
This enforcement action sets a precedent for hospitality sector compliance. Businesses must reconfigure billing systems to ensure service charges are opt-in, transparent, and non-coercive, or risk CCPA penalties under Section 20(1) of the Consumer Protection Act, 2019.
Citations
- Consumer Protection Act, 2019, Section 20(1)
