Australia Fines Uber $21 Million for Overestimating Prices and Misleading Customers

Australian Federal Court has fined rideshare company Uber $21 million (US$14.2 million) for overestimating service fees and falsely advertising a cancellation fee for its Australian services between 2017 and 2021.

In a federal court ruling, Justice Michael O’Bryan found that Uber breached Australian Consumer Law in two instances.

The first one involves misleading representations concerning cancellation messages displayed on Uber’s mobile app between December 2017 and September 2021.

During this period, when a customer proceeded to cancel a trip within Uber’s free cancellation period, they would receive a message which stated: “You may be charged a small fee since your driver is already on their way.”

The free cancellation period was specified in the “cancellation policy” section of Uber’s website and app. An example of such a period was five minutes after a driver accepted the trip for UberX, Uber Premier, and Uber Comfort customers.

Despite displaying the message, the company did not charge the cancellation fee as it did not have the legal right to do so.

The court found that the message was incorrectly displayed in approximately 7.39 million trips for UberX, Uber Premier, and Uber Comfort services, and 27,313 trips were ultimately not cancelled between December 2018 and August 2021.

Uber Pool customers received the cancellation message nearly 75,000 times, but only 332 trips were not cancelled.

At the same time, Uber was found to have made misleading representations and engaged in deceptive conduct by overestimating the prices consumers would pay for an Uber Taxi ride (a service available only in Sydney) between June 2018 and August 2020.

While Uber displayed the fares within a certain range, customers ended up paying less than those amounts in 89 percent of the trips.

Details of the Fines

Prior to the court hearing, Uber and the Australian Competition and Consumer Commission (ACCC), which brought the case against the rideshare company, agreed to settle the lawsuit with a $26 million payment.

However, the judge made some changes to the penalty amount.

In normal circumstances, the penalty of a civil lawsuit is agreed upon by the parties and needs the judge’s approval before becoming official.

A close-up of an Uber app is seen on an iPhone in Cardiff, Wales, on Feb. 19, 2021. (Matthew Horwood/Getty Images)

O’Bryan said the suggested $26 million penalty greatly exceeded the amount he considered appropriate because of the inadequate evidence he had been given to back up the proposed fines.

In the offence of overestimating fares, the judge reduced a proposed $8 million penalty for that contravention to $3 million for several reasons, including no evidence of any loss or damage to customers and drivers.

“It is important to emphasise that UBV (Uber) overestimated the fare at the time of booking, and the consumer ultimately paid a lower fare,” O’Bryan said in the ruling.

However, the judge agreed that the $18 million proposed penalty for the offence concerning the misleading cancellation message was appropriate.

As such, O’Bryan ordered Uber to pay $21 million for the two offences, plus another $200,000 to cover ACCC’s cost of prosecuting the case.

In addition, the rideshare giant needs to publish corrections and implement a compliance program to ensure that it follows the Australian Consumer Law.

Parties’ Response

In a statement issued following the court hearing, Uber apologised to customers and said that it had made changes to its platform based on the concerns raised by the ACCC, including discontinuing the Uber Taxi option in 2020 and changing the cancellation messaging.

Meanwhile, ACCC Chair Gina Cass-Gottlieb said the federal court’s penalty sent businesses a message that misleading consumers about the cost of a product or service was a serious matter.

“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,” she said in a statement.

“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.”

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Alfred Bui is an Australian reporter based in Melbourne and focuses on local and business news. He is a former small business owner and has two master’s degrees in business and business law. Contact him at [email protected]

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