India's consumer rights agency received unusually high 10,000 complaints against Ola Electric (OLAE.NS) over a year and has sent a notice seeking explanation from the SoftBank-backed e-scooter maker, a top official at the watchdog said on Tuesday.
Following a stellar market debut in August, shares in India's biggest e-scooter maker have fallen around 40% in recent weeks as sales have dipped with angry customers taking to social media to complain about its after-sales service.
Ola has also been in the spotlight this week following a public spat between its founder and a comedian which revived questions over its service and prompted a wave of complaints online.
India's Central Consumer Protection Authority has sent a so-called show cause notice to Ola after the government received more than 10,000 complaints between September 2023 and August 2024 about issues such as delayed and unsatisfactory services and inaccurate invoices, said Nidhi Khare, the consumer affairs secretary.
Such a number of complaints is too high, Khare told Reuters, adding the agency took the step as "you cannot leave it to individual consumers to fight their way out".
"Repeatedly similar complaints are coming, it is affecting a large number of consumers," Khare added, citing some complaints were related to allegations about the company's "unprofessional conduct".
Ola, which has a 27% market share in India's e-scooter market, did not respond to a request for comment.
It told stock exchanges late on Monday that it received the notice on Oct. 7 for "alleged violation of consumer rights, misleading advertisement and unfair trade practices" and will respond within 15 days.
The Indian authority has the power to direct the company to discontinue its practices and reimburse consumers, failing which it can also impose a fine of up to 2 million rupees ($23,828) or order imprisonment of staff found guilty of malpractice for up to six months, or both.
HSBC analysts said in a September note they visited multiple Ola service hubs and most "appeared overwhelmed by the service requests".
