Regulators Turn Up the Heat on Bhavish Aggarwal as Consumers' Ire Rise

The regulatory scrutiny on Ola has been increasing. The latest case was when the Central Consumer Protection Authority (CCPA) directed the ride hailing app to develop a mechanism that will provide choice to consumers with regards to the refund mode. 

During the grievance redressal process, customers can opt for the refund either directly through the bank account or via coupon. Further, for all rides, the ride hailing platform has been instructed to provide a bill, receipt, or invoice to customers for greater transparency. 

This comes soon after the authority also issued a showcase notice to Ola Electric with regards to its servicing facility. In a regulatory filing on October 7, the company mentioned that they have been provided a timeline of 15 days to respond to the notice. The company received the notice for “alleged violation of consumer rights, misleading advertisement, and unfair trade practices.” 

The issue intensified on social media platform X after a verbal spat between comedian Kunal Kamra and Ola CEO Bhavish Aggarwal. It started with one social media post where Kamra criticized the service center facility of Ola Electric’s EV bikes. While the fight soon turned into name-calling, what was visible amid the fight was the wide spread anger of customers about the EV service centers of the company. Several users of the bike wrote on social media platform X that their scooters have been lying in the service center for months due to a delay in servicing. 

CCPA Steps In 

In October this year, headed by Chief Commissioner Nidhi Khare, the CCPA mentioned that Ola was practicing ‘unfair trade practices’ under the Consumer Protection Act, 2019. 

This pertains to Ola not providing invoices for auto rides booked via the app. It says, “Customer invoices for auto rides will not be provided due to changes in Ola’s auto service T&Cs.” Not issuing a bill for the service falls under the purview of ‘unfair trade practices’.

Any deceptive method that is used to promote the sale or provision of goods or services is called ‘unfair trade practice.’ This includes issues ranging from failing to issue a bill, cash memo, or receipt for the goods sold or services provided, as required by regulations.

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Additionally, the CCPA also observed that whenever a consumer asked for a refund, Ola gave a coupon. This in turn compelled customers to use the app again. The fact that customers are not given a choice between a bank account refund or a coupon is in clear violation of the no-question asked refund policy and rights of consumers. 

Wider Discussion About Consumer Rights 

Now, the CCPA has highlighted that with its intervention, several customer-centric steps have been taken by the Ola app. This ranges from displaying the cancellation policy during booking, providing details of the grievance and nodal officers, revising payment cycles for drivers, and more. 

Experts indicate that the CCPA's intervention against Ola Cabs is a bold step towards shielding consumers from exploitative trade practices and fostering trust in India's digital economy. 

“This action by the CCPA is significant because the CCPA is now visibly undertaking pro-consumer actions concerning digital platforms as it is authorized to do so under the Consumer Protection Act, 2019 (CPA),” says Ameet Datta, partner, Saikrishna & Associates.

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This is also significant, as this shows how important the National Consumer Helpline can be for the CCPA to assess if it needs to intervene in matters of consumer awareness, adds Datta. The helpline number received a total of 2,061 complaints from January 1 to October 9, 2024, against Ola. The complaints mostly dealt with driving, asking for extra cash, a non-refund amount to the customer, and a higher fee charged from the consumer than what was shown at the time of booking. 

Datta further highlights that if Ola or any other ride-hailing app, for that matter, fails to address their complaint, they can lodge complaints with the National Consumer Helpline set up by the Department of Consumer Affairs. “The CPA also allows for class action complaints covering multiple similarly interested consumers, which is a significant redressal mechanism. This mechanism has until now mostly been used against real estate developers by home buyers,” adds Datta. 

Experts point out that the key takeaway of this ruling is that the CCPA's crackdown on Ola Cabs marks a significant milestone in empowering consumers and also promoting accountability. “All in all, this landmark ruling sets a precedent, cautioning cab aggregator platforms against unfair trade practices and underscores the importance of consumer rights and transparency in the digital economy,” says Jasmine Damkewala, senior partner at Circle of Counsels and Advocate-on-Record, Supreme Court of India. 

Ola Electric Faces Regulatory Scrutiny

Meanwhile, Ola Electric is also facing regulatory scrutiny by the Automotive Research Association of India (ARAI) with regards to its pricing strategies. This is as per a Business Standard report. 

The report indicates that ARAI has asked Ola Electric to clarify why it did not notify the agency about the price cut for its S1X 2kWh model before launching the 'BOSS' sale. 

The company reduced the price from Rs 74,999 to Rs 49,999. The company said in a statement, “From 10th–12th October, customers can own an Ola S1 scooter for as low as Rs 49,999 and avail additional benefits worth up to Rs 25,000 on the S1 portfolio. The S1 X 2kWh is available at just Rs 49,999 (limited stock daily), while the flagship S1 Pro gets discounts of up to Rs 25,000 off and a flat Rs 5,000 exchange bonus.” 

The sudden reduction in price might affect the company getting subsidies from the government. However, the company had told ARAI the price was Rs 75,001. Under the PM E-DRIVE scheme, subsidies are given on the basis of Rs 5,000 per kWh. Additionally, the incentive would be reportedly based on 15 percent of the factory price of the vehicle or the capped per vehicle price (whichever is lower). So the cap to get the subsidy would be Rs 11,250. Now, with the reduction in price, the dynamics change. Under Rs 49,999, the cap would be at Rs 7,500. 

Amid the ongoing development, the share price of Ola dropped to Rs 87.56 on BSE on October 14. This indicates a 2.93 percent fall in the share price.