Uber faces govt notice over pre-ride tipping, flagged as unfair trade
New Delhi: The Centre has issued a notice to Uber India over its 'advance tip' feature, calling it an unfair and exploitative trade practice that undermines consumer rights.
The Central Consumer Protection Authority (CCPA), acting on complaints from users, has asked the ride-hailing platform to explain why customers are being nudged to tip drivers before a ride even begins.
'The practice of 'Advance Tip' is deeply concerning,' consumer affairs minister Prahlad Joshi said in a post on X on Wednesday. 'Forcing or nudging users to pay a tip in advance for faster service is unethical and exploitative. Such actions fall under unfair trade practices. Tip is given as a token of appreciation, not as a matter of right, after the service,' he wrote.
The minister added that he had directed CCPA to examine the issue. The regulator, which falls under the Department of Consumer Affairs, has now formally sought an explanation from Uber India. 'Fairness, transparency and accountability must be upheld in all customer interactions,' Joshi said
Uber's 'advance tip' prompt appears during the booking process and encourages users to pre-select a gratuity amount before the ride begins—a feature found in other ride-hailing apps as well.
CCPA's notice to Uber marks a fresh round of scrutiny on app-based service providers and their compliance with the Consumer Protection Act, 2019, which bars misleading advertisements and unfair pricing strategies.
A senior official said that if Uber's response is unsatisfactory, CCPA could initiate further action, including penalties or an order to roll back the feature.
Uber did not immediately reply to emailed queries on the development.
Several users have complained that Uber's 'advance tip' feature creates pressure and confusion, with some alleging that pre-tipping influences driver allocation or pickup speed—claims that, if substantiated, could amount to discriminatory service delivery.
Consumer groups have slammed the feature as deceptive.
'This distorts the voluntary nature of tipping and can amount to coercive monetization. Platforms must clearly differentiate between service charges and optional tips,' said Ashim Sanyal, CEO of Consumer Voice, a consumer protection group.
'Such unethical trade practices violate the Consumer Protection Act and warrant strict legal action,' added Manish K. Shubhay, partner at The Precept-Law Offices. 'Companies must uphold transparency and fairness in all consumer dealings, and any attempt to exploit customers under the guise of service is indefensible.'
This isn't the first time Uber has come under the scanner.
As reported by Mint on 1 April, the government had earlier confirmed in Parliament that Uber and rival Ola were being investigated for charging different fares based on a user's phone operating system.
On 10 January, CCPA issued notices to both companies after complaints surfaced about iOS users being charged higher fares than Android users for identical rides. Both Ola and Uber denied the allegations of charging different fares based on a user's phone model.
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