Uber, Ola and other cab aggregators directed to cease advance tipping option; govt calls it ‘misleading, unfair’

The central government has directed cab aggregators such as Uber and Ola to discontinue the option to tip drivers before a ride is booked, Consumer Affairs Secretary Nidhi Khare said on Wednesday, describing the practice as “misleading” and “unfair” to consumers.

Khare's remarks came a day after the Central Consumer Protection Authority (CCPA) imposed a ₹10 lakh fine on ride-hailing platform Rapido over several alleged unfair business practices, including allowing customers to tip drivers in advance.

The CCPA is also looking into the business practices of Uber and Ola. Responding to questions about cab aggregators, Khare, who also heads the CCPA, said on Wednesday that the National Consumer Helpline had received numerous complaints against such platforms.

“(Consumers were) basically alleging that actually, even before taking the ride, there was a concept of introducing an advance tip,” she said, adding that some consumers were being led to believe that they would not receive a ride unless they paid the tip.

“Now, this we found to be misleading and also an unfair trade practice. And after detailed investigation into the matter and also after hearing, we have ordered discontinuation of this kind of you know built-in mechanism,” PTI quoted Khare as saying.

She stressed that tipping is entirely voluntary and should remain a consumer’s choice after completing the ride.

Regarding the cases involving Uber and Ola, Khare said the investigations are still underway.

The action against Rapido follows a broader review of cab and bike-taxi aggregator platforms operating across India, with regulators examining practices such as pre-ride tipping and dynamic fare pricing.

The CCPA had earlier issued notices to Uber, Ola, Rapido and Namma Yatri, asking the platforms to adhere to the Guidelines for Prevention and Regulation of Dark Patterns, 2023.

Dark patterns refer to deceptive interface features designed to mislead users or influence them into making choices they may not otherwise have made.

What CCPA said about Rapido case

In a statement issued on Tuesday, the CCPA said it had imposed a "penalty of ₹10 lakh on Roppen Transportation Services Pvt Ltd, which operates the ride-hailing platform Rapido, for misleading advertisements, unfair trade practices, unfair contract and dark patterns in the manner in which riders were prompted to pay more before their rides were confirmed".

During its assessment of the platforms, the authority found that the "Rapido app displayed prompts such as 'Higher the price, higher the chance of getting a ride' and 'Captains aren't accepting at ₹60. Try adding 10, 20, 30' while a rider's booking was still being processed".

The regulator also flagged the way Rapido's algorithm handled fares. According to the CCPA, "Rapido's algorithm first quoted a fare to the rider and, after the rider booked at that fare, prompted the rider to pay more on the ground that drivers were not accepting the original price".

The authority said the practice could give riders the impression that paying an additional amount would improve their chances of securing a ride quickly. It also noted that riders had limited room to negotiate after already proceeding with the booking.

"The practice was held to constitute 'Confirm Shaming', a dark pattern identified under the Guidelines for Prevention and Regulation of Dark Patterns, 2023, as it creates a sense of urgency and fear of losing the ride if the consumer does not agree to pay more," the authority said.

The CCPA observed that the fare shown during booking is calculated after considering factors such as distance, travel time, traffic conditions, toll charges and the driver’s payment.

The regulator therefore found no basis to ask riders to increase the fare for the same journey after booking it but before the trip started.