Uber could be forced to pay $26 million in penalties for misleading cancellation warnings in its app that cost its users millions in fees.
The ACCC has instituted Federal Court proceedings against the ridesharing company, who admit it breached the Australian Consumer Law by making false or misleading statements in cancellation warning messages and Uber Taxi fare estimates.
Between “at least” December 2017 and September 2021, Uber’s rideshare app displayed a warning to users hoping to cancel an Uber, saying: “You may be charged a small fee since your driver is already on their way”. Despite Uber allowing a five minute free cancellation period, this warning would show up regardless.
More than two million Australian consumers were shown the misleading cancellation warning before last September, when the message was amended to read “You won’t be charged a cancellation fee” within the free five-minute grace period.
“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,” ACCC Chair Gina Cass-Gottlieb said.
In September 2021, Uber amended its cancellation messaging for Uber services across Australia to ’You won’t be charged a cancellation fee’, if users seek to cancel during the free cancellation period.
In addition, between June 2018 and August 2020, the Uber app displayed an estimated fare range for the Uber Taxi option that it admits “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 notes that “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.” This option was available only in Sydney, and removed in September 2020.
“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.
“Consumers rely on apps to provide accurate information, and 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,” Cass-Gottlieb said.
Uber is expected to pay $26 million in penalties, with the Federal Court deciding the exact penalty at a later date.
