No more forced tips: Consumer watchdog fines Chaayos Rs 50,000 for auto-adding service charge in bills

NEW DELHI: The Central Consumer Protection Authority (CCPA) has imposed a Rs 50,000 penalty on tea cafe chain Chaayos for automatically adding a service charge to customers’ bills, ruling that restaurants cannot force consumers to pay what is meant to be a voluntary tip.In an order dated July 14, the consumer watchdog directed Chaayos to refund the service charge collected from the complainant, remove the default addition of service charges from its billing systems across all outlets, and submit a compliance report within 15 days.The case arose from a complaint filed by Shashank Sood through the National Consumer Helpline after he was charged a service fee over and above GST at a Chaayos outlet. According to the complaint, the café refused to remove the charge when requested, saying it was mandatory under company policy and non-refundable.Chaayos, however, told the authority that the charge was voluntary and would be waived if a customer asked. It also claimed that customers were informed through signboards at billing counters and said it had discontinued the practice from May 1, 2025, after updating its billing software and internal procedures.

The CCPA was not convincedA bench comprising Chief Commissioner Nidhi Khare and Commissioner Anupam Mishra held that embedding a service charge into the billing software so that it was automatically added to every bill deprived customers of a genuine choice.“It is important to note that the genesis of the service charge in the bill is the command embedded in the billing software, leading to default addition of service charge to every bill. Therefore, it shall be erroneous to presume that the service charge was voluntary,” the authority observed.The bench said the practice violated consumers’ rights under the Consumer Protection Act, 2019, as well as the CCPA’s 2022 guidelines, which clearly state that restaurants cannot automatically add service charges, collect them under any other name, or make payment of the charge a condition for providing service.The authority also noted that these guidelines had already been upheld by the Delhi high court in March 2025.Quoting the high court, the CCPA reiterated that while customers are free to leave a tip if they appreciate the service, such payments must remain entirely voluntary.“Service charge or tip… is a voluntary payment by the customer. It cannot be compulsory or mandatory,” the authority noted, adding that any gratuity should be left to the customer’s discretion and must not be automatically included in the bill.The CCPA further observed that despite the high court’s ruling, Chaayos continued adding the charge by default until May 1, 2025, and failed to promptly address the consumer’s grievance.Apart from refunding the complainant, the authority directed the company to remove the automatic service charge feature from its billing systems, mobile applications and menus across all outlets, pay the Rs 50,000 penalty and file a compliance report within 15 days.The order reinforces the consumer watchdog’s position that service charges are optional and that restaurants cannot present them as mandatory or automatically include them in customers’ bills.