Uber, Ola and other taxi drivers ordered to end tipping option in advance; government calls it “misleading, unfair” | Today’s news
The central government has ordered cab aggregators like Uber, Ola to stop tipping drivers before booking a ride, Consumer Affairs Minister Nidhi Khare said on Wednesday, describing the practice as “misleading” and “unfair” to consumers.
Khare’s remarks came a day after the Central Consumer Protection Authority (CCPA) imposed a ₹10,000,000,000 fine on the Rapido platform for several alleged unfair business practices, including allowing customers to tip drivers in advance.
The CCPA is also investigating the business practices of Uber and Ola. Khare, who also heads the CCPA, said on Wednesday that the National Consumer Helpline had received numerous complaints against such platforms in response to queries on cab aggregators.
Quick answers to key questions
•5 QUESTIONS
The government found that tipping options in advance were misleading and unfair to consumers, leading many to believe that tipping was necessary to secure a ride.
Dark patterns are deceptive interface features designed to mislead users, such as prompts suggesting that paying more increases the chance of a ride.
Tipping in advance can create the false impression that consumers have to pay extra to secure a ride, and thus constitute an unfair business practice.
Riders should be careful as additional prompts for payment may be designed to mislead them; they should confirm whether the extra amount is really necessary.
Rapido was fined ₹10,000 by the CCPA for unfair trading practices, including misleading advance tip calls and deceptive pricing strategies.
“(Consumers) basically claimed that there was actually a concept of tipping in advance even before the ride,” she said, adding that some consumers were led to believe they wouldn’t get a ride unless they paid a tip.
“Now we have found that it is a misleading and also an unfair business practice. And after a detailed investigation into the matter and also after a hearing, we have ordered to stop this kind of built-in mechanism that you know,” Khare was quoted as saying by PTI.
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She emphasized that tipping is completely voluntary and should remain the consumer’s choice after the ride is complete.
As for the cases involving Uber and Ola, Khare said investigations are still on.
The action against Rapid follows a wider review of taxi and bike-taxis aggregator platforms operating across India, with regulators looking into practices such as pre-ride tipping and dynamic fare pricing.
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The Central Consumer Protection Authority (CCPA) had earlier issued notices to Uber, Ola, Rapido and Namma Yatri and asked the platforms to comply with the Prevention and Regulation of Dark Patterns Guidelines 2023.
Dark patterns refer to deceptive interface features designed to mislead or influence users into making decisions they would not otherwise make.
What the CCPA said about the Rapido case
In a statement issued on Tuesday, the CCPA said it had imposed a “penalty ₹10 lakh against Roppen Transportation Services Pvt Ltd, which operates the Rapido platform, for misleading advertisements, unfair business practices, unfair contracts and dark patterns in the way riders were asked to pay more than their ride was confirmed.
During the assessment of the platforms, the authority found that “the Rapido app displayed prompts such as ‘the higher the price, the higher the chances of a pickup’ and ‘Captains do not accept on ₹60. Try adding 10, 20, 30′ while rider booking was still being processed”.
The regulator also flagged the way Rapido’s algorithm handled tariffs. According to the CCPA, “Rapid’s algorithm first offered a fare to a rider and, after the rider booked that fare, prompted the rider to pay more based on the drivers not accepting the original fare.”
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The authority said the practice could give riders the impression that paying the extra amount would improve their chances of securing a ride quickly. He also noted that riders had limited room to negotiate after they had already proceeded to book.
“The practice was considered ‘Confirm Shaming’, a dark pattern identified under the 2023 Guidelines for the Prevention and Regulation of Dark Patterns, as it creates a sense of urgency and fear of losing the ride if the consumer does not agree to pay more,” the authority said.
The CCPA observed fare displayed during booking is calculated after considering factors such as distance, travel time, traffic conditions, tolls and driver payment.
The regulator therefore found no reason to ask riders to increase fares for the same journey after booking, but before the journey has started.
