Rideshare giant Uber books $21m penalty for misleading customers

Rideshare giant Uber books $21m penalty for misleading customers

US rideshare operator Uber has been slogged with $21 million in pecuniary penalties by the Federal Court of Australia after it determined the company had misled customers as to the price of certain rides and whether they would be charged for cancelling trips.

The decision, handed down today by Justice O’Bryan, is the result of Australian Competition and Consumer Commission (ACCC) legal action which commenced in April this year.

The ACCC alleged Uber engaged in misleading or deceptive conduct and breached Australian Consumer Law by making statements in its cancellation warning messages and Uber Taxi fare estimates.

Uber admitted to engaging in this conduct, and the Federal Court determined that its conduct warranted $21 million in penalties - $5 million less than what the ACCC was asking for.

According to the Federal Court, Uber made false or misleading representations and engaged in conduct that was misleading or deceptive by displaying an estimated fare range for an Uber Taxi trip, when in fact the price of the taxicab was actually more likely to be less than the lower range of the estimate.

The misleading taxi fare estimates were displayed between June 2018 and August 2020, after which the taxi ride option, available only in Sydney, was removed.

In addition, the court found Uber engaged in misleading or deceptive conduct by displaying to customers a message that they may be charged a small fee on cancellation of a trip via a warning with words to the effect of 'You may be charged a small fee since your driver is already on their way’. In fact, customers were not charged any fee at all as long as they cancelled the trip during the free cancellation period.

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. 

An example of the cancellation screen
An example of the cancellation screen

 

The $21 million fine payable to the Commonwealth of Australia comprises $3 million for the Uber Taxi contraventions, and $18 million for the cancellation fee conduct. A further $200,000 is payable to the ACCC to cover the watchdog’s legal fees.

The $3 million penalty is down from $8 million initially sought by the ACCC, as O’Bryan said it was ‘outside the range of penalties that could be considered appropriate in the circumstances of this case’.

“In all the circumstances of the case, I consider an appropriate aggregate penalty to be $3 million,” Justice O’Bryan said.

“Although it is only one metric, an aggregate penalty of $3 million is roughly equivalent to an estimate of aggregate average fares paid by consumers in respect of UberTaxi trips in respect of which the UberTaxi Representation was made.

“However, I consider a penalty of $18 million for the contraventions arising from the Cancellation Representations to be an appropriate penalty, albeit at the high end of the range of appropriate penalties.”

Uber was also ordered by consent to implement a compliance program, not to make similar representations about cancellation fees to consumers for the next three years, and to publish a corrective notice on its website.

ACCC chair Gina Cass-Gottlieb said the penalty reflected the seriousness of Uber's conduct.

"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,” Cass-Gottlieb 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.”

“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."

Uber Australia apologised to impacted customers in a statement issued this afternoon.

"We value the important work the ACCC carries out on behalf of Aussie consumers, and we worked closely with them throughout their almost two-year investigation," Uber Australia said.

"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. 

"As always, we will continue to listen to the feedback from driver partners and the millions of Australians who take rides with Uber to deliver the best possible experience."

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