ASCI clears Zomato, Swiggy of drip pricing allegations

The Advertising Standards Council of India (ASCI) recently cleared allegations of drip pricing that food delivery platforms Zomato and Swiggy were alleged to be indulging in. The complaint of deceiving consumers through differential pricing during during the final billing process, nut the platforms said the changed pricing was displayed before the consumer pays with full disclosure of the bifurcation of pricing. Based on the arguments presented by the platforms, ASCI secretariat concluded that the complaint was not worth upholding.

The two complaints were initiated by the council on a suo moto basis, and were upheld by the ASCI secretariat on July 20. The case enumerated against Swiggy says that the price of the item that was initially shown as Rs1190 came up to Rs 1379 during billing, which was due to addition of GST, platform fee, delivery fee and restaurant fee. In the Zomato case, meanwhile, the item which was initially advertised with the price of Rs 306.67 was sold at Rs 396.10 after inclusion of the additional fees.

No written response or documents for substantiation came from either platform before the set due date after which the secretariat decided to take things forward on an exparte basis. However, the advertisers responded to the objections raised in the complaint post the due date.

Swiggy’s representation stated that the guidelines being quoted as violated are impractical to implement, and are not in line with the industry practice. It further said that, “Swiggy transparently communicates any additional charges during the checkout process ensuring that consumers are fully informed about the total amount payable before finalizing their purchase. Further, whilst it is submitted that ASCI's definition of drip pricing underscores the importance of disclosing all relevant charges upfront to prevent misleading consumers, however, we respectfully submit that Swiggy's pricing model does not fit within the parameters of drip pricing as defined by ASCI.”

A similar clarification by Zomato stated that such necessary fees cannot be displayed to a customer at the time of selecting food item(s) as it varies due to several factors, such as distance from the selected address of delivery, quantity of the food item(s), monetary value / aggregated total of all items, applicable discounts and taxes amongst other variables. All of this can only reflect in the final basket, it added. They also said that customers are aware of the price of the items along with the breakup of charges, before finalizing and initiating the payment towards an order.
The advertisers further sought for Re-examination of the exparte recommendations given by ASCI. The Consumer Complaints Council (CCC) viewed the In-app advertisement and considered the advertiser’s response for Re-examination of the complaints.

Swiggy also pointed out that it is not the case where the customer is being shown a price at the checkout page and a different high price at the payment gateway, that, as per the CCPA definition may be considered by drip-pricing. “While prices may increase during checkout due to these additional charges, Swiggy ensures that consumers are fully informed about the total amount payable before finalizing their purchase. Therefore, Swiggy's pricing practices do not fall under the deceptive pricing practices outlined by the CCPA and ASCI,” they argued.

The CCC agreed that the food prices displayed in the menus of food delivery apps are the price of the meal, and it does not include the service charges and taxes. Concluding that this is a standard industry practice that most online food delivery apps follow, the CCC observed that the advertisers’ pricing clearly communicates all charges including statutory taxes, delivery fees, and platform fees, during the checkout process. They drew the conclusion that the platforms were not indulging in misleading representation of the food prices, as alleged. The In-app advertisement is not in contravention of the ASCI Code, and ASCI Guidelines For Online Deceptive Patterns in Advertising and therefore both the complaints were not upheld upon re-examination.