India’s top product certification agency will investigate e-scooter maker Ola Electric’s deficiency in service standards and product issues, India’s consumer affairs secretary told Reuters on Thursday.

Last month, the Central Consumer Protection Authority (CCPA) sent Ola Electric a notice seeking an explanation from the SoftBank-backed company after the consumer rights agency received an unusually high 10,000 complaints.

Ola, India’s top e-scooter maker, responded that it had resolved 99.1 percent of the complaints.

After reviewing that response, the CCPA has now asked the Bureau of Indian Standards to conduct a detailed investigation into the matter, consumer affairs secretary Nidhi Khare said on Thursday.

Ola Electric did not immediately respond to a Reuters email seeking comment.

The complaints were mostly for “minor” issues, Ola’s founder Bhavish Aggarwal said on an earnings call last week.

“Two-thirds of it actually are just minor issues like loose parts or customers unfamiliar with the software used,” Aggarwal said.

The rising complaints and ensuing regulatory scrutiny have cast a shadow on the e-scooter maker, following its stellar market debut in August.

Ola Electric’s shares are down about 7.6 percent from their listing price of 76 rupees. On the day, its shares were down about one percent, while auto stocks had risen 0.5 percent.

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The first-of-its-kind action has been initiated against IAS coaching centres and will also be extended to coaching classes for candidates aspiring to take entrance exams for the Indian Institutes of Technology, medical, chartered accountant, law and management courses, among others. While these centres showcase celebrity teachers in advertisements to lure aspirants, the so-called tutors never or rarely take classes.

The apex government institution for safeguarding consumer rights has issued notices to coaching institutes indulging in such unethical practices to make them refund the fees to aspirants who were taken for a ride by falsely promising classes by celebrity tutors.

Rising complaints and student rights

The National Consumer Helpline (NCH) has received numerous complaints about unethical trade practices by coaching centres to mislead aspirants.

“A common issue raised by students involves the absence of the so-called ‘celebrated’ guides or faculty members who were advertised as part of the coaching programme,” the first person quoted earlier said.

“However, when students realize this and seek a refund, their claims are often denied, with the institutes citing a policy that refunds can only be availed within 15 days of admission,” the person said. “This practice has left many aspirants feeling cheated and without recourse.”

The Department of Consumer Affairs (DoCA) has directed IAS coaching centres to adopt a more student-centric approach and discontinue the malpractice of rejecting or declining refund claims.

In FY24, 16,276 students from various coaching classes, including civil services, IIT, medical, CA, and others, approached the helpline after their requests were either declined, rejected, or not adequately addressed by the coaching centres, according to the consumer affairs ministry data.

The data also shows a rising trend in the number of dissatisfied students filing complaints with NCH. In FY22, 4,815 grievances were registered, followed by 5,351 in FY23, and 16,276 in FY24.

In 2024 (January-September), 6,980 students have approached NCH for quick resolution of their issues at the pre-litigation stage. 

Neither of the people quoted earlier provided the number of complaints related to promised celebrity teachers failing to conduct classes nor on teaching a few classes throughout the year.

“If there is a breach of trust by the coaching institutes, students are entitled to refunds. The coaching centres cannot deny refunds and should not force students to remain enrolled. They may charge a certain amount for the period a student availed themselves of the services and refund the remaining amount,” this person said.

“The ministry also encourages students to register their grievances through NCH,” this person said.

Penalties imposed on coaching institutes

Mint reported on 19 August that CCPA has served notices on 45 coaching institutes for allegedly violating consumer rights with misleading advertisements and unethical tactics. Of these, 15 have been penalized, with total fines amounting to ₹38.60 lakh.

The coaching institutes that have been penalised include Rau’s IAS Study Circle, IQRA IAS, Chahal Academy, Analog IAS, APTI PLUS Academy, and Unacademy, each with a penalty of ₹1 lakh; Maluka IAS, EduTap Learning Solutions, Yojana and Plutus IAS, and Sriram’s IAS, each with ₹3 lakh; KSG-Khan Study Group IAS and Shankar IAS Academy with ₹5 lakh; and BYJU’s IAS with ₹10 lakh. Seekers Education was fined ₹50,000, and Skyway Career Hub ₹10,000.

Queries emailed to the IAS coaching centres and the ministry of consumer affairs remained unanswered till press time.

“Business enterprises need to make their processes more transparent and move away from unethical trade practices,” said Ashim Sanyal, chief executive officer of Consumer Voice. “Aspirants are often attracted to certain coaching institutes based on the reputation of specific teachers, and when they do not receive this service, they should have the right to a refund of their fees.”

The Central Consumer Protection Authority (CCPA) has instructed Ola, to implement a consumer-friendly mechanism allowing customers to choose their preferred refund method. According to the Ministry of Consumer Affairs, Food and Public Distribution, consumers will now have the option to receive refunds either directly to their bank accounts or via coupons, a significant change from Ola’s previous policy.

The directive, aimed at enhancing consumer rights and service transparency, was issued by CCPA’s Chief Commissioner Nidhi Khare. The CCPA’s intervention came after observations that Ola’s “no-questions-asked” refund policy was solely offering coupon codes for future rides without providing a clear choice to consumers.

This practice was found to potentially infringe on consumer rights, as it could incentivize consumers to book additional rides rather than offering a direct monetary refund.

The authority emphasized that a fair refund policy should not unduly push consumers to utilize services again but should instead empower them with a choice.

Additionally, the CCPA took issue with Ola’s policy regarding invoices for auto rides. It was found that the app displayed a message stating, “Customer invoice for Auto rides will not be provided due to changes in Ola’s auto service T&Cs,” when customers attempted to access invoices.

The CCPA deemed this practice as an “unfair trade practice” under the Consumer Protection Act, 2019, which mandates issuing a bill, receipt, or cash memo for services rendered.

Following CCPA’s regulatory intervention, Ola has introduced several consumer-centric changes to its platform aimed at enhancing transparency and consumer trust.

One significant change is the display of grievance officer and nodal officer details. The names, phone numbers, and email addresses of the grievance and nodal officers are now prominently listed in the support section of Ola’s website.

Additionally, the permitted time for ride cancellation, as per Ola’s policy, is now displayed at the time of booking, with the cancellation fee clearly mentioned.

Ola has also added a new acceptance screen for drivers showing both the pickup and drop-off locations to avoid confusion. To improve user experience, additional reasons for canceling rides have been provided to consumers. 

Furthermore, details such as base fare, per-kilometer fare, and pre-wait charges are now publicly displayed, ensuring consumers have access to important fare information before booking a ride.

In an effort to enhance driver experience, Ola has issued communications encouraging drivers to accept digital payments and switch on the air conditioning as needed. The company has also adjusted the payment cycles for drivers to ensure timely payments.

The CCPA’s directive comes amid a significant number of complaints registered on the National Consumer Helpline (NCH). From January 1, 2024, to October 9, 2024, a total of 2,061 complaints were filed against Ola, covering issues such as higher fares charged than initially displayed at the time of booking, non-refund of amounts to customers, drivers requesting extra cash payments, and incorrect drop-off or pickup locations.