Swiggy and Zomato refuse to refund customers for cancelled orders

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Indian food and grocery ordering companies Zomato and Swiggy refuse to refund their customers if they cancel their order. This has been noted to occur when the customers pay in advance for their food orders (prepaid orders).

Background

While Swiggy and Zomato may be competitors, they have often worked together on joint startups and collaborations with each other despite competing for market share. It is unclear as to why both businesses decided to make similar policies of withholding refunds at relatively the same time. But, it has been subject to backlash by both users and consumer protections of India.

Information about the product/service history to provide the necessary context surrounding the incident

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Withholding Refunds for Canceled Orders

The cancellation policy of Swiggy states that they may withhold the refunds if a prepaid customer cancels their order deeming such cancellation a "breach of contract".

The terms of service of Zomato similarly calls such cancellation an "Authorization Breach" for which they claim the right to withhold the refund amount.

This has violated consumer rights of India in the following ways:

Lack of transparency when ordering

This information is not shown to the customer when they are paying for their order in advance. This information is hidden in the cancellation policy page or terms and conditions pages of the apps that most customers of the apps do not usually click on as it is written in a lengthy and legal manner. A quick but imperfect word count of the length of Zomato's terms of service page using two command-line tools available on a GNU/Linux system (pandoc -f html -t markdown "https://www.zomato.com/policies/terms-of-service/" | wc -w) tells us that the page contains approximately 22,479 words. The firefox browser's reader mode also estimates an average reader to take 116-148 minutes to read through Zomato's terms of service page from start to finish.

Unclear term violations

There is no exact definition of what may constitute an action that can be deemed "breach of contract" or "Authorization Breach" provided within the policy. This gives Swiggy and Zomato full discretion to decide what actions may or may not fall under the term. There is no way for the customers or the restaurants who receive the order to challenge the decision of Swiggy or Zomato to not refund the customer under this policy.

These policies also negatively affect the restaurant owners as they receive no compensation for a cancelled order and further have their payouts reduced by the sum of refunds for cancelled orders. The food prepared by the restaurants before the order is cancelled also goes to waste.

[Company]'s response

If applicable, add the proposed solution to the issues by the company.

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Lawsuit

An inquiry has been instituted to review these practices by the Central Consumer Protection Authority of India; and may take legal action against both companies for unfair terms. As of now there currently is no active case against both companies for this type of policy and will remain until further notice.

Consumer response

Summary and key issues of prevailing sentiment from the consumers and commentators that can be documented via articles, emails to support, reviews and forum posts.

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