The last two weeks haven’t been great for the reputations of India’s food delivery apps.
After Zomato was accused of selling fake paneer as real paneer to restaurants, and a Zomato Hyperpure warehouse was found to have packaging dates in the future during a raid, arch-rival Swiggy has been penalized for unfair business practices. A Hyderabad-based consumer District Consumer Disputes Redressal Commission has fined Swiggy for artificially inflating restaurant distances on Swiggy One. This enabled the company to not give customer the free delivery that their membership would’ve otherwise entailed.
The complaint was filed by one Emmadi Suresh Babu, who is a government employee and resides in Balanagar in Hyderabad. On 27th September 2023, he’d ordered food from a restaurant, and paid Swiggy a delivery fee of Rs. 103 for 9.7 kilometers. Babu then purchased the Swiggy One membership, under which Swiggy had claimed to provide free deliveries under a distance of 10 km. But when Babu ordered from the same restaurant on 1st November 2023, he discovered that Swiggy now claimed that the restaurant was 14 kilometers from his house as opposed to 9.7 kilometers just over a month ago. Because Swiggy now said the distance was more than 10 kms away, it refused to give Babu the benefits of free delivery under his Swiggy One membership.
Babu contacted Swiggy about the discrepancy, but Swiggy wasn’t forthcoming, and tried to claim that the delivery route could be modified using the mobile GPS. Not satisfied with the explanation, Babu approached the customer court. Swiggy failed to appear before the commission within the designated period, and the judgement was passed ex-parte.
The court ordered Swiggy to pay Rs. 25,000 toward punitive damages for collecting delivery charges by deceiving customers and artificially inflating the distance to restaurants. It ordered Swiggy to pay Rs. 5,000 as compensation for causing mental agony and inconvenience to Suresh Babu, and Rs. 5,000 towards his litigation costs. It also ordered a refund of the food value (Rs. 353) along with 9 percent interest, and also a refund of Rs. 103 of the delivery fee it had fraudulently collected.
This isn’t the best look for Swiggy, which is set to go public later the month at a valuation of $11 billion. There had been much consternation online over Swiggy and Zomato reducing the free delivery distances from 10 km to 7 km on their respective memberships, but it now appears that Swiggy was also artificially inflating restaurant distances to prevent its members from availing of the free deliveries it had promised. Swiggy and Zomato are now essentially a duopoly, but with one company selling fake ingredients to restaurants and faking packaging dates, and another artificially inflating restaurant distances to get around free deliveries, it appears that it’s the Indian customer that’s being left with a bad taste in their mouth over the business practices of country’s two food ordering giants.