Uber to Pay $21 Million Over ‘Misleading’ Cancellation Fee Messages

Uber to Pay $21 Million Over ‘Misleading’ Cancellation Fee Messages

The ACCC in April instituted proceedings in the Federal Court against Uber after the ride-sharing heavyweight admitted it engaged in misleading or deceptive conduct.

Today, Justice Michael O’Bryan handed down his decision, ruling Uber was to pay $21 million to settle the case.

In a statement back in April, the Australian Competition and Consumer Commission (ACCC) said Uber admitted that it breached the Australian Consumer Law by making false or misleading statements in cancellation warning messages and Uber Taxi fare estimates.

The Uber app displayed a cancellation warning to riders who sought to cancel a ride saying words to the effect of ‘You may be charged a small fee since your driver is already on their way’, even when consumers were seeking to cancel a ride within Uber’s free cancellation period.

Uber’s free cancellation period is five minutes after the driver has accepted the trip. It is as straightforward as it sounds – a user can cancel their ride without incurring a fee during this five-minute period.

But according to the ACCC, more than 2 million Aussie Uber users were shown the misleading cancellation warning between December 2017 and September 2021.

As the ACCC statement explains, Uber amended its cancellation messaging in September 2021 to ‘You won’t be charged a cancellation fee’, if users seek to cancel during the free cancellation period.

In addition, the watchdog said that for about two years, the Uber app displayed an estimated fare range for the Sydney-only ‘Uber Taxi’ ride option which Uber has admitted falsely represented that the fare of a taxi booked through that option would likely be within an estimated fare range shown in the app.

The ACCC added: “In fact, the algorithm used to calculate the estimated fare range inflated these estimates so that the actual taxi fare was almost always lower than that range, and consequently cheaper than Uber’s lowest estimate.”

These messages, the statement says, were displayed between June 2018 and August 2020, after which the Taxi ride option was removed.

At the time, the ACCC and Uber agreed to make joint submissions with the ACCC to the Court for penalties totalling $26 million to be imposed. But Justice O’Bryan declared it was an “unusual case” where a lower penalty was more appropriate. As ABC is reporting, both parties failed to submit enough evidence to justify the higher penalty, and the ACCC failed to prove consumers had suffered significant harm.

“Since the ACCC raised this, we have worked to streamline our in-app messages to make it clear exactly when cancellation charges will or will not apply, per occasion, so that riders always have certainty,” Uber said in April.

Today, it took the opportunity to apologise.

“We apologise to our riders for the mistakes we made, and we have since proactively made changes to our platform based on the concerns raised with us. This includes discontinuing the UberTAXI option in 2020 and changing our cancellation messaging to make it clear exactly when cancellation charges will or will not apply, so that riders always have certainty,” Uber said.

ACCC chair Gina Cass-Gottlieb said 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.

“We took this important case because we understand that consumers rely on apps, like the Uber app, to provide accurate information to inform their purchasing decisions because they cannot independently check or monitor whether the information displayed is accurate,” Cass-Gottlieb added.

This article has been updated since it was first published.

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