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Why is CCPA issuing notices to ride-hailing platforms?

The notice paints the scale of problems users face on such apps.

The Central Consumer Protection Authority (CCPA) issued notices to India’s two most prominent ride-hailing platforms— Ola and Uber— over allegations of unfair trade practices and violation of consumer rights, as per a government press release.

As many as 2,482 and 770 complaints were registered by consumers from all over the country against Ola and Uber respectively between April 1, 2021, and May 1, 2022, according to data from the National Consumer Helpline (NCH).

The government also provided a break-up of the nature of grievances, showing that most of them were listed under the ‘Deficiency in Services’ category. It includes issues such as:

  • Lack of response from customer support
  • Driver’s refusal to accept online payment and insistence upon cash
  • Charge of a higher fee despite operating on the same route previously at a lower cost
  • Unprofessional driver behaviour
  • Driver’s refusal to switch on AC despite the companies’ promise of an AC ride

Recently, cab aggregators have come under fire for a deteriorating quality of service which drivers say is on account of the rising fuel prices and stagnant fares. The notice indicates that things have come to a head where government intervention is necessitated; it may also lead to a marginal improvement in the resolution of these consumer grievances.

What are the issues raised in the CCPA notice?

The companies have been asked to respond to these notices within 15 days, according to a PTI report. The government underscored some of the issues raised in its notice:

  • Gaps in grievance redressal: Ride-hailing platforms lack inadequate consumer grievance redressal mechanism as they do not display a customer care number and details of the grievance officer as is required.
  • Imposition of a cancellation fee: The notice said that the companies levy a cancellation charge in an unreasonable manner because users are not informed of the duration within which cancelling a ride is permitted.
    • Dearth of information over cancellation: “The amount of cancellation charge is not displayed prominently on the platform before booking the ride. Undue cancellation charges are borne by users when they are forced to cancel the ride due to unwillingness of the driver to accept the ride or come at the pick-up location,” read the release.
  • Opaque use of algorithms: The notice also said that there was a lack of information about the algorithm used by the company to charge different fares for the same route from two individuals.
  • Acquiring consent in a dubious manner: The notice asked the companies to address the inclusion of add-on services by presenting them as pre-ticked boxes. However, this could lead to further confusion and result in the inclusion of add-on services without the explicit consent of the user before a ride.

Understanding complaints received by the companies

Out of nearly 2,400 complaints received by Ola, consumers accused the company of not refunding the paid amount (521), levying unauthorised charges (174), and charging more than the MRP (139), among others.

Source: Press Information Bureau (PIB)

Uber also faced similar complaints from consumers where they accused the company of not heeding their issues related to wrong promises, delays in delivery of product, and blocking of accounts, among others.

Source: PIB

What is CCPA? The CCPA was set up to promote, protect, and enforce the rights of consumers. It regulates matters related to violation of consumer rights, unfair trade practices, and misleading advertisements. The CCPA also has an investigation wing, headed by a Director-General, which carries out enquiries into such violations.

How did the drivers react to the notices?

Telangana Gig and Platforms Workers Union (TGPWU) supported the notice issued by the CCPA. They said that the companies have deemed drivers to be users of their apps which makes them consumers of Ola and Uber. They urged CCPA to take action against Ola and Uber on driver complaints as well.

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“The drivers also face the same problems the riders as a consumer are facing,” read a statement by TGPWU.

Here are some of the issues that the group wants CCPA to take notice of:

  • No safeguard against assault by the customer on a ride and danger to life
  • Loss of property
  • Unreasonable levy of penalties and deductions wherein the drivers are not informed why these penalties or deductions have been made on their earnings
  • Undue penalties and deductions are borne by the drivers based on arbitrary ratings
  • Lack of transparency on user complaints coupled with one-sided decision-making by the companies
  • No information on the algorithm to determine fares for a route, ratings, boost, surge pricing, incentives, etc.
  • Allocation of rides and lack of information on the trip

Uber recently announced the following changes to accommodate the longstanding demands of the drivers:

  • Hiking fares on the back of rising fuel prices across cities with the help of the Uber Driver Advisory Council
  • Disclosing destination details before the commencement of the trip
  • Incentives for long-distance pick-ups
  • Information on the mode of payment

TGPWU had complained that the changes should not be the same for drivers in different cities as they all have varying fuel prices.

“The ‘independent’ Driver Advisory Council (DAC) is nothing but a well-practised ploy to set up an illegal company union that Uber has been doing all across the world. The decisions taken in consultation with the DAC are a sham,” TGPWU had said in a statement.

Consumer Affairs Ministry reins in cab aggregators

The CCPA notice comes days after a meeting between cab aggregators and the consumer affairs ministry on May 10, 2022. The ministry warned companies of strict action unless there was an improvement in their policies, PTI reported. The cab aggregators had been summoned following user complaints about the increase in fares, cancellation charges, etc.

The aggregators were asked to submit information about their policies around surge pricing, data storage, and algorithms. The government may also issue an advisory against unfair practices by cab aggregators, the report added.

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CCPA’s Chief Commissioner Nidhi Khare said the government has communicated that there will be “zero tolerance against such malpractices” by cab aggregators. The meeting was attended by representatives of companies like Ola, Uber, Meru, Jugnu, and Rapido.

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I cover several beats such as Crypto, Telecom, and OTT at MediaNama. I can be found loitering at my local theatre when I am off work consuming movies by the dozen.

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