CCPA slaps Uber with notice on its advance tip feature
In a post on X, Pralhad Joshi, Minister of Consumer Affairs, Food and Public Distribution, said forcing or nudging users to pay a top in advance for faster services is unethical and exploitative.
The Central Consumer Protection Agency (CCPA) has sent ride-hailing platform Uber a notice on its advance tip feature that allows users to add a tip to encourage drivers to accept a ride.
In a post on X, Pralhad Joshi, Minister of Consumer Affairs, Food, and Public Distribution, said that the practice of tipping a driver in advance 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. Tip is given as a token of appreciation not as a matter of right, after the service,” he added in the post.
Uber did not respond to YourStory’s request for comment on the matter.
According to an industry source with knowledge of the matter, the model was introduced after some ride-hailing platforms did not pay the 5% GST levied after claiming to have a software-as-a-service (SaaS) model, which helped their drivers earn more through tips. “To avoid an unfair advantage, eventually all players moved to this method,” they added.
The union government had levied a 5% GST on passenger transport services including ride-hailing companies.
Uber shifted to a SaaS model for their auto rides in February this year, following an industry-wide shift towards a subscription-based model for their drivers.
Rival platform Namma Yatri, which pioneered the SaaS model, also allows users to add a tip for the ride. “Adding a tip helps you find a ride faster”, the app shows.
Similarly, Rapido allows users to decrease or increase the requested fare for the ride with a disclaimer, “Higher the price, higher the chance of getting a ride.”
Ola Consumer also introduced a similar option telling users to “tip now to boost the chances of getting a ride sooner.”
Edited by Kanishk Singh