“Good,” “Great,” or “Best Service Ever”? Consumers and Tipping Regulations in Canada

In focus groups, consumers report that tips are requested too often and almost everywhere. They are irritated by tip solicitations in payment interfaces, especially because of the high default amounts proposed and persuasive messages that accompany the tip options (“Good,” “Great,” “Best Service Ever”).

In their view, these solicitation strategies are intended to influence their decision-making process. In particular, frustration is growing around the application of tip percentages on taxes.

Many consumers also lament having to compensate for the low wages of employees receiving tips. Finally, they believe that tipping weighs heavily on their wallets and have been long awaiting its regulation.

Despite these issues, there is little consumer oversight of tipping in Canada, with the notable exception of Quebec, which has adopted standards to ensure neutrality when it comes to tip amounts. These new standards prohibit predetermined tip options from being calculated on the after-tax amount. They require that predetermined tip options be presented consistently, and that an option to customize the amount be displayed. In addition, the new regulations will prohibit the addition of emojis, adjectives and other messages alongside the proposed tip options.

Outside of Canada, while few consumer protection standards for tipping exist, Canadian legislators can take inspiration from three other countries. In the United Kingdom, a code of best practice provides for notices to be displayed in establishments to inform consumers of the destination and distribution of the tip.

In Switzerland, tips must be included in the price of the service and merchants cannot request a tip in addition to this price. In Colombia, businesses cannot propose tipping more than 10% of the price of the service and must post a “tip policy” in their establishments, indicating that tipping is discretionary.

An analysis of payment interfaces in Canada supports the conclusion that legislation governing the solicitation of tips by merchants could be put in place relatively quickly. The configuration of point-of-sale systems used by numerous merchants already includes a wide range of settings, such as disabling tip requests, displaying options before or after taxes, and choosing the amounts and percentages displayed.

In conclusion, Option consommateurs is issuing recommendations aimed at protecting consumers’ freedom of choice and ensuring transparency in tipping practices. The consumer rights organization proposes that federal and provincial governments limit businesses that are allowed to actively solicit tips, regulate the display of information on payment terminals and online platforms, and exclude taxes from any tip option calculated as a percentage of the price. 

Option consommateurs also recommends posting a notice in establishments, indicating to whom the tip paid by the consumer is given and specifying its entirely discretionary nature.