Have you noticed some restaurants and bars adding an automatic tip or a pre-selected gratuity appearing to your bill?
While tipping is common in some countries, Australia has traditionally operated on a wage-based system where tipping is voluntary but recently, we’ve been seeing in a dark pattern of automatic tipping which can sometimes also be disguised in ‘hidden fees’ or ‘drip pricing’.
Businesses can ask for a tip, and in some circumstances, they may add a service charge, but they must be transparent about it and not mislead you as the consumer, about the true price you will pay.
Under Australian Consumer Law, businesses must clearly communicate the total price, including any unavoidable or pre-selected fees, before you commit to an order.
Automatic tipping commonly happens in hospitality when people pay in-person through eftpos, use QR code ordering or ride-sharing or food delivery apps.
Sometimes an online ordering platform can offer a pre-selected tip, provided you can clearly see and adjust or remove it before completing the transaction, but when you’re dining in, this may not always be clear.
That’s why it’s important to always ask for an itemised bill so you can check the total amount and see if a compulsory tip” or “gratuity” has been included.
Many people may not be aware that if a tip/gratuity/or service fee has been automatically added to your bill without the venue disclosing it to you upfront, the fee can be removed on request.
Another way a business can add on costs is when extra charges are hidden or only revealed at the final stage of a transaction. This is known as “drip pricing”, where consumers are attracted by one price only to discover additional mandatory charges later in the purchase process.
Businesses must be upfront and clearly disclose to consumers at the start of a purchasing process the types of fees that will apply and when.
A “tip” or “gratuity” is different from a surcharge which is commonly added during public holidays or weekends and is allowed - provided they are properly disclosed. Consumers must be able to see this information before ordering, for example a note on the menu.
The bottom line for service charges or automatic gratuities is transparency.
When dining-out or ordering food through a QR code or online platform, take your time to review the itemised bill or checkout screen and remember:
- Any mandatory service charges must be clearly communicated well in advance
- Optional service charges must never be automatically added to a bill
If you’re unsure, ask staff to explain any additional charges you do not understand.
For further information or advice, contact Consumer Protection on 1300 30 40 54 or email consumer@lgirs.wa.gov.au