Ola Electric slapped with show cause notice following surge in consumer complaints

The central government has stepped in to address consumer complaints regarding service deficiencies of e-scooter manufacturer Ola Electric, government sources told Business Today TV.

The Central Consumer Protection Authority (CCPA) has taken cognisance of thousands of complaints and issued a showcause notice to Ola Electric.

The showcause notice of October 3, observes that Ola Electric “appears to be in violation of several provisions of the Consumer Protection Act, 2019”, including those related to deficiencies in services, misleading advertisements, unfair trade practices, and violations of consumer rights. The company has been asked to respond to the notice within 15 days of receipt.

The National Consumer Helpline, operated by the Department of Consumer Affairs, has received 10,644 complaints since September last year, alleging service issues related to Ola e-scooters. The complains are from 1st September 2023 to 30th August 2024.

Of these, 3,389 complaints—nearly one third—pertain to delays in providing service for its e-scooters. Another 1,899 complaints involve delays in the delivery of new vehicles, while 1,459 complaints were registered for services that were promised but not provided.

According to the showcause notice, the gist of the allegations by consumers pertains to vehicles sold with manufacturing defects, instances of second-hand vehicles being sold, partial or no refunds on booking cancellations, recurring defects despite servicing, overcharging, inaccurate invoices, and multiple issues with batteries and vehicle components.

Additionally, complaints have also been registered alleging unprofessional conduct and improper complaint closures, among other issues, the notice adds.

Sources further indicated that Ola Electric may have violated several provisions of the Consumer Protection Act, including deficiencies in services, misleading advertisements, unfair trade practices, and violations of consumer rights. The company has been asked to respond to the notice.

When contacted, Nidhi Khare, Secretary of the Department of Consumer Affairs, confirmed that "the CCPA is looking into a large number of complaints about Ola Electric, mainly related to service inefficiencies."

"We hope the company addresses these concerns promptly and resolves the issues faced by consumers," she added.

The NCH, a toll-free service (1915) established by the Department of Consumer Affairs, helps consumers resolve problems with businesses and service providers.

Ola Electric has acknowledged receiving a show cause notice from the Central Consumer Protection Authority (CCPA), according to an exchange filing by the company. Ola Electric has stated that it will file a formal response to the CCPA and confirmed that the notice does not currently affect its financial or operational activities.

The Ola Electric stock fell nearly 9 per cent to an intra-day low of Rs 90.26 today. Service issues with Ola Electric products have been the subject of widespread public criticism, including a spat between comedian Kunal Kamra and Ola founder, Bhavish Aggarwal, on X (formerly Twitter).

Ola Electric's shares debuted on the market on August 9 with a flat start but saw an initial surge, hitting the upper circuit of 20 per cent for three consecutive trading days. However, the stock has since plunged 74 per cent from its peak of Rs 157.40. Ola raised Rs 6,154 crore through its IPO, which was subscribed 4.27 times, reflecting strong investor interest. The IPO price band was set between Rs 72 and Rs 76 per share.

The company reported a consolidated net loss of Rs 347 crore in Q1 FY25, an increase from the Rs 267 crore loss in the same period last year. However, its revenue from operations grew by 32.3 per cent year-on-year, reaching Rs 1,644 crore for the quarter, compared to Rs 1,243 crore the previous year.