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Global tech

Uber cops $21 million fine for misleading users over cancellation fees and taxi prices

- December 7, 2022 2 MIN READ
Photo: AdobeStock

That’s roughly Uber’s commission on 3 million $20 rides.

The Federal Court ordered Uber to pay the $21 million penalty after the US tech giant admitted it had engaged in misleading or deceptive conduct and made false or misleading representations to consumers following legal action brought by the competition regulator ACCC. The breaches the Australian Consumer Law also involved the price of Uber Taxi rides.

Uber had a small win with the decision – the fine is $5 million less than the $26 million penalty the ACCC was seeking, which the tech company agreed to.

The penalty was split between $3 million for the cancellation message and $18 for the false taxi prices.

The Uber cancellation message the company admitted was deceptive and misleading

The app message appeared between at least December 2017 and September 2021, saying “You may be charged a small fee since your driver is already on their way”, even if users sought to cancel during Uber’s 5-minute free cancellation period.

Uber changed the message in September 2021 after the ACCC flagged its concerns. More than two million users saw it.

The rideshare company also admitted the price range estimate for an Uber Taxi ride (available in Sydney between July 2018 and August 2020) on the app was false and misleading – and higher than the actual Uber Taxi fare most of the time.

Uber agreed more than a thousand consumers used the Uber Taxi option a week and were shown inaccurate price estimates.

The ACCC began legal action against Uber over the breaches in consumer law in April this year.

ACCC Chair Gina Cass-Gottlieb said they launched case because consumers rely on app to provide accurate information to inform their purchasing decisions.

“This $21 million penalty clearly signals to businesses that misleading consumers about the cost of a product or service is a serious matter which can attract substantial penalties,” she said.

“We note Justice O’Bryan’s statement that the ordered penalty should not be understood as any reduction in the Court’s resolve to impose penalties appropriate to achieve the statutory objective of deterring contraventions of the Australian Consumer Law.”

Uber agreed some Uber group employees were aware of issues with its Uber Taxi fare estimates and cancellation messaging, but the company didn’t monitor the functionality of the algorithm for the accuracy of its taxi fare estimates.

The company was also ordered to implement a compliance program, not to make similar representations about cancellation fees to consumers for the next three years, publish a corrective notice on its website, and to pay $200,000 towards the ACCC’s costs.