The Centre has directed cab aggregators to stop offering customers the option to tip drivers before a ride is booked, Consumer Affairs Secretary Nidhi Khare said on Wednesday.
The government has termed the practice misleading and an unfair trade practice after receiving complaints from consumers through the National Consumer Helpline. The complaints were primarily linked to the way advance tipping was presented on ride-hailing platforms.
Consumers raised concerns over tipping
According to Khare, some consumers complained that they were encouraged to pay a tip before taking the ride. They also alleged that the option created an impression that refusing to tip in advance could affect their chances of getting a ride.
"We found this to be misleading and also an unfair trade practice," Khare said.
Following an investigation and hearing, authorities ordered platforms to discontinue the built-in mechanism that allowed customers to tip before completing their journey.
Khare, who also heads the Central Consumer Protection Authority (CCPA), said tipping should remain voluntary. Customers, she stressed, should be free to decide whether they want to tip a driver and how much, after the ride has ended.
Rapido faces Rs 10 lakh penalty
The development comes a day after the CCPA imposed a Rs 10 lakh penalty on Roppen Transportation Services Private Limited, which operates Rapido.
The action was linked to alleged unfair business practices, including advance tipping, misleading advertisements, unfair contract terms and the use of dark patterns. The regulator said such practices could prompt customers to make additional payments before their rides are confirmed.
The CCPA's action is part of a wider examination of practices followed by cab and bike-taxi aggregators in India.
Ola, Uber investigations underway
The regulator is also examining the practices of other major ride-hailing companies. Khare said investigations involving Ola and Uber are currently underway.
Earlier, the CCPA had issued notices to Uber, Ola, Rapido and Namma Yatri, asking the platforms to comply with the Guidelines for Prevention and Regulation of Dark Patterns, 2023.
Dark patterns are interface designs that can steer consumers towards choices they may not otherwise have made. The ongoing review covers issues including advance tipping and dynamic pricing, as authorities examine whether such practices comply with consumer protection rules.