‘Unethical and exploitative': Consumer watchdog seeks explanation from Uber on advance tipping feature
The Central Consumer Protection Authority (CCPA) on Wednesday issued a notice to ride-hailing app Uber over its advance tipping feature, which prompts users to pay tips to drivers before booking rides, Union Consumer Affairs Minister Pralhad Joshi announced on X.
'The practice of 'Advance Tip' is deeply concerning. Forcing or nudging users to pay a tip in advance, for faster service is unethical and exploitative. Such actions fall under unfair trade practices,' the minister wrote. 'Tip is given as a token of appreciation not as a matter of right, after the service. Taking cognisance of this, I had asked CCPA to look into it and today CCPA has issued a notice to @Uber in this regard, seeking explanation from the platform. Fairness, transparency and accountability must be upheld in all customer interactions.'
Forward tipping, also referred to as pre-tipping or upfront tipping, is a feature in ride-hailing apps where passengers are prompted to add a tip for the driver at the time of booking a ride, before the trip is confirmed or completed. Unlike traditional tipping, which occurs after the service based on the quality of the experience, forward tipping is designed to incentivise drivers to accept a ride by offering an additional payment upfront.
The action comes based on complaints addressed to the minister by multiple users. Many users flagged the way aggregators are seeking 'tips before trips', which goes unchallenged by transport departments across states.
Satya Arikutharam, an urban mobility expert, told indianexpress.com, 'The consumer is held to ransom and very often is forced to tip just to get a ride. Drivers are also now becoming unprofessional due to this practice and are accepting only trips that offer them tips.'
Namma Yatri, the Bengaluru-based auto-hailing app launched in November 2022, was among the first to introduce advance tipping in India's ride-hailing ecosystem.
The platform, which operates on a zero-commission model where drivers keep 100 per cent of their base fares, implemented tipping as an additional feature on its app. By late 2023, Rapido had also incorporated tipping into its service.
Meanwhile, Uber introduced advance tipping only last month, being the last among the ride-hailing firms to adopt this feature. However, the app introduced post-service tipping globally back in 2017.
According to an industry source, offering drivers tips upfront has become an industry norm with different names. 'Some platforms that did not pay 5 per cent GST claimed that they have a SaaS (software as a service) model and got drivers to earn more through tips. To avoid an unfair advantage, all players moved to this model eventually,' the source said.
Sanath Prasad is a senior sub-editor and reporter with the Bengaluru bureau of Indian Express. He covers education, transport, infrastructure and trends and issues integral to Bengaluru. He holds more than two years of reporting experience in Karnataka. His major works include the impact of Hijab ban on Muslim girls in Karnataka, tracing the lives of the victims of Kerala cannibalism, exploring the trends in dairy market of Karnataka in the aftermath of Amul-Nandini controversy, and Karnataka State Elections among others. If he is not writing, he keeps himself engaged with badminton, swimming, and loves exploring. ... Read More
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