DLCA Comments on the Issue of Automatic Restaurant Gratuity Charges

Devin Carrington, Commissioner Designee of the Department of Licensing and Consumer Affairs (DLCA) takes this opportunity to inform the general public and restaurant establishments of the department’s position on gratuity charges that are commonly required of individuals and groups of individuals that frequent some local restaurant establishments.

Because many restaurant establishments charge mandatory gratuity to persons that eat at their establishment, this presents two problems, stated Carrington. First, because a gratuity is by definition a voluntary tip for services paid by the patron to the restaurant for services rendered, the patron should not be forced to pay such a charge. In other words, gratuity should not be mandatory but voluntary.

Secondly, if such a payment is mandatory, it is actually a charge for service rendered and should not be called gratuity. Carrington went on to state, if the payment is in fact a service charge but is being called gratuity, this constitutes deceptive trade practice in contravention of Title 12A of the Virgin Islands Code.

Further, the Commissioner stated that the rules and regulations developed by the department require that the total selling price of of all consumer goods offered for sale must be conspicuously displayed to the customer, at the point of offering it for sale. Carrington noted, requiring the consumer to pay a price for an item above and beyond the price advertised without first informing the consumer of the total cost involved is deceptive and in contravention of law. Carrington further stated, it is just as deceptive when a mandatory service charge is called a gratuity.

Lastly, Carrington stated that the general public is placed on notice and such restaurant establishments are advised, to conspicuously display for the customer, in a plain and visible manner prior to sale, the full cost of any given item to include service charges. Carrington said, such service charges should be reasonable and should be reserved for large groups of customers.