Consumer authority slaps Rs 10 lakh fine on Rapido for misleading ads, unfair trade practices
The action was taken suo motu by the authority following investigation into the company's advertisement claim: 'Guaranteed Auto. Auto in 5 mins or get Rs 50'.
The CCPA, in its order issued on Wednesday, directed Rapido to immediately discontinue the misleading advertisements and compensate consumers who were not provided the promised cashback. Each affected consumer is to be paid Rs 50, as originally advertised.
It also instructed the company to file a compliance report within 15 days.
According to CCPA, Rapido's misleading advertisement ran for over 18 months in multiple regional languages and across more than 120 cities. 'Therefore, the CCPA finds it necessary to impose a penalty to safeguard the interests of consumers,' it said.
As per the order, between April 2023 and May 2024, 575 complaints were filed against Rapido on the National Consumer Helpline and these covered issues such as non-refund of amounts, overcharging, service deficiency, and failure to provide promised benefits.
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Of these, five complaints were directly related to the misleading 'guaranteed auto' claim.
Consumers had reported that instead of receiving Rs 50 upon failure to get an auto within 5 minutes, they were credited with only Rs 5 in Rapido coins — which could only be redeemed against bike rides and expired within seven days. The authority found that these terms were neither clearly stated nor prominently displayed.
In its defence, the company submitted that the terms and conditions were clear that customers would be eligible for coins 'up to Rs 50 which could be redeemed against Bike rides on Rapido platform' and that the validity of such coins was for 7 days from the time it is credited to customer's wallet.
However, the CCPA noted that the advertisements did not include the term 'up to', and the 'T&C Apply' disclaimer was barely visible, misleading the average consumer.
But the CCPA investigation found that the company didn't include the term 'up to' in its advertisements, and the 'T&C Apply' disclaimer was barely visible, misleading the average consumer.
The regulator is examining issues of advance tip by riding hailing firms.
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