New Delhi: After Ola Electric, the Central Consumer Protection Authority (CCPA) is turning the screws on Ola Cabs, and has directed India’s largest ride hailing platform to implement a mechanism allowing consumers to choose their preferred refund method; according to a statement by the Consumer Affairs, Food and Public Distribution ministry on Sunday.
This option will help consumers as the current practice of issuing vouchers compels them to use Ola’s services again, even if they don’t wish to book another ride. The directive was sent to Ola Cabs by CCPA headed by chief commissioner Nidhi Khare after a meeting held with its key officials last week, and seeks to safeguard consumers from coercive trade practices, fostering greater transparency and trust in India’s digital economy.
Ola has also been asked to provide consumers with an invoice for all auto rides. The directive was issued after CCPA found Ola Cabs was not adhering to the Consumer Protection Act, 2019 (CPA), and found the cab aggregator guilty of unethical trade practices during hearings, said two people aware of the development.
“It was observed that not issuing a bill or invoice or receipt for the goods sold or services rendered constitutes an ‘unfair trade practice’ under the Consumer Protection Act, 2019,” the statement said.
Ola Cabs directive
While Ola Cabs has been under the CCPA scanner for a while, with notices being issued earlier; it is for the first time that the apex government institution for safeguarding consumer rights has issued a directive against Ola Cabs. According to Germany-based data research portal Statista, India’ ride hailing market will reach $7.53 billion in 2024, and $11.64 billion by 2029.
Between 1 January 2022 and 31 January 2024, a total of 40,28,24,709 rides were cancelled by Ola customers, according to the consumer affairs ministry. Of these, while 356,981,881 cancellations accounting for 88.6% were free of charge; 45,842,828 rides, or 11.4%, incurred cancellation fees. These cancellation charges have been a significant point of contention for customers. The CCPA is now also reviewing the complaints related to charging cancellation fees.
Queries emailed on Thursday to spokespersons of Ola Cabs, and ANI Technologies Pvt. Ltd remained unanswered till press time.
“CCPA observed that whenever the consumer raised any grievance on the Ola app, as part of its no-question-asked refund policy, Ola only provided a coupon code which could be used for the next ride without providing a clear choice to the consumer to opt between a bank account refund or a coupon. It was observed that this violates consumer rights and the no-question-asked refund policy cannot mean that the company incentivises people to simply use this facility for taking another ride,” the statement added.
Complaints against Ola Cabs
The spike in consumer complaints against Ola prompted CCPA to intervene. According to the National Consumer Helpline (NCH)) 2,061 complaints were registered against Ola from 1 January till 9 October ranging from issues such as higher fare charged from consumer, non refunds, driver asking for extra cash, and driver dropping at incorrect location and not reaching the correct pick up location.
“Ola Cabs failed to submit any compliance or action taken report in response to the notices issued by the CCPA,” said the first person cited above requesting anonymity.
CCPA’s intervention led to consumer-centric changes in Ola app, such as prominently displaying the permitted time of cancellation and cancellation fee amount, contact details of grievance officer and nodal officer, and revised payment cycles for drivers for ensuring swift payment among other changes, according to the statement.
Legal experts underlined the need for protecting consumer rights in India’s growing digital economy.
While explaining the importance of CCPA’s action against Ola Cabs, Manish K. Shubhay, partner at The Precept-Law Offices, said, “This move emphasises the need to protect consumer rights in India’s growing digital market. It sends a clear message to all companies that breaking consumer trust will lead to serious regulatory consequences, promoting accountability in the industry.”
In many cases, companies use intermediaries as a way to protect themselves, shifting responsibility to drivers and consumers, he said. This practice creates gaps in accountability, as drivers and consumers are left to handle issues on their own. Ultimately, it raises concerns about fairness and transparency in the industry, he added.
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