Global tech

Uber cops $26 million fine after admitting it misled more than 2 million Australians over its cancellation fee

- April 26, 2022 2 MIN READ
Ridesharing company Uber has admitted it misled customers when it warned them of additional fees for cancelling trips and has agreed to wear a $26 million fine following action by consumer watchdog the Australian Consumer and Competition Commission.

Uber has admitted that it breached the Australian Consumer Law by making false or misleading statements in cancellation warning messages and Uber Taxi fare estimates, and has agreed to make joint submissions with the ACCC to the Federal Court for penalties totalling $26 million to be imposed.

The ACCC investigation alleged at between at least December 2017 and September 2021, the Uber app displayed a cancellation warning to users who sought to cancel a ride saying: “You may be charged a small fee since your driver is already on their way” even if they planned to cancel the ride within Uber’s 5-minute free cancellation period.

More than two million Australian consumers were shown the misleading cancellation warning, the ACCC says.

The Uber cancellation message that’s led the company to admit it misled users

The US tech company, which began operating illegally in Australia in late 2012 (it took nearly 3 years before the ACT became the first jurisdiction to legalise ridesharing in 2015), also confessed to inflating the cost of catching a taxi over the two years it offered a taxi option in Sydney.

Between June 2018 and August 2020, the Uber app displayed an estimated fare range for the ‘Uber Taxi’ ride option which the ACCC says Uber admitted falsely represented the cost of a taxi to make Uber look cheaper.

The ACCC says the algorithm used to calculate the estimated fare range inflated the estimates so the actual taxi fare was almost always lower than that range, and consequently cheaper than Uber’s lowest estimate. Uber killed off the taxi option in Sydney during the pandemic at the end of August 2020.

ACCC Chair Gina Cass-Gottlieb said that in September 2021, Uber amended its cancellation messaging for Uber services across Australia to ’You won’t be charged a cancellation fee’ if they cancelled within the 5-minute window.

“Uber admits it misled Australian users for a number of years, and may have caused some of them to decide not to cancel their ride after receiving the cancellation warning, even though they were entitled to cancel free of charge under Uber’s own policy,” she said.

“Uber admits its conduct misled users about the likely cost of the taxi option, and that it did not monitor the algorithm used to generate these estimates to ensure it was accurate.”

Cass-Gottlieb said the misleading information on Uber’s app deprived consumers of a chance to make an informed decision about whether or not to choose the Uber Taxi option.

“Digital platforms like Uber need to take adequate measures to monitor the accuracy of their algorithms and the accuracy of statements they make, which may affect what service consumers choose. This is particularly important as online businesses often carefully design their user interfaces to influence consumer behaviour,” she said.

An example of Uber app showing the Taxi option in Sydney and fare estimate range, which the company now admits was also misleading

The two parties have agreed to jointly seek orders from the Federal Court including declarations that Uber contravened the Australian Consumer Law, and for Uber to pay $26 million in penalties.

The Federal Court will decide at a later date whether the orders sought, including the proposed penalties, are appropriate.

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