Why's govt asking food delivery apps to ramp up complaint redressal system?

The India’s consumer affairs ministry has -- of late -- taken a host of measures to protect the interest of consumers. It is locked in a prolonged battle with the restaurant industry over the imposition of service charge. 

Early this month, the ministry had asked restaurants to stop the practice of levying service charge 'by default', saying that it does not have legal sanctity. The government in its guidelines, issued way back in 2017, had already said that entry of a customer in a restaurant cannot itself be construed as a consent to pay service charge.

But most restaurants continue to levy this charge. The National Restaurant Association of India or NRAI has issued a statement, saying that the service charge is legal and the Department of Consumer Affairs is yet to take a call on the new framework.

According to reports, the government is now mulling prohibiting the practice through an amendment to the Consumer Protection Act, 2019.

And now, even as there seems to be no end in sight to this battle over service charge, the government has opened another front against the food services industry after hundreds of consumer complaints.

On Monday, the government asked online food business operators to submit a proposal to improve their consumer grievance redress mechanisms. The proposal, which has to be submitted in 15 days, will also include steps to be taken to make billing more transparent too. According to reports, two food business operators have received over 3,500 complaints on their consumer helpline in the last 12 months.

These complaints have now prompted the consumer affairs department to ask operators like Swiggy and Zomato to “transparently show consumers the breakup of all charges included in the order amount such as delivery charges, packaging charges, taxes, surge pricing etc.”

The directions came after a meeting between Consumer affairs secretary Rohit Kumar Singh and major e-commerce food business operators.

The food delivery platforms were also told to show individual consumer reviews transparently and refrain from showing only the aggregation of reviews.

According to an official statement, Swiggy received as many as 3,631 complaints while Zomato registered 2,828 in the last one year.

According to the statement, a maximum 803 complaints registered with Swiggy were for deficiency in services. 628 complaints were filed for delay in delivery of products. 456 complaints were over delivery of damaged products. 401 people approached the helpline over delivery of wrong products. 391 complaints were filed over non-refund on paid amount. And, last but not the least, at least 100 people complained after receiving non-vegetarian food instead of the vegetarian food they had ordered.

Meanwhile, the complainants flooded the consumer helpline of Zomato too. While 707 complaints were registered for deficiency in services, 499 complaints were over delivery of damaged products. 307 complaints were over the paid amount not refunded. And 298 people dialled the helpline after getting wrong products.

Scores of people also registered complaints over discrepancy in delivery time -- between the promised one and the actual time taken. Absence of a mechanism to separate genuine reviews from the fake ones was also raised. In most cases, like what happens in other platforms too, those associated with the restaurants post scores of positive and motivated reviews about it.

According to reports, the National Restaurant Association of India (NRAI) raised the issue of customer information not being shared by the e-commerce food delivery platforms with the restaurants. The association said that if the eateries get the contact details of the consumers, they will be able to serve them better.

In April this year, the Competition Commission had launched a probe against Zomato and Swiggy over alleged unfair business practices in their dealings with restaurant partners. The CCI move had come after the restaurant association NRAI asked it to investigate the food delivery companies for breaching platform neutrality by providing priority to exclusive contractors. The probe report will be submitted in 60 days.

According to Statista, the revenue of online food delivery firms is expected to show an annual growth rate -- CAGR 2022-2026-- of 11.92%, resulting in a projected market volume of $ 21.95 billion by 2026. So as the food business operators grow, it is in their interest to bring transparency into their functioning, which will also lessen the friction with the government. Meanwhile, the recent steps taken by the government will indeed address consumers’ concerns.