Uber facing $26 million penalty for “misleading” cancellation warning messages

Uber facing $26 million penalty for “misleading” cancellation warning messages

Global rideshare and deliveries giant Uber is staring down a $26 million penalty after admitting to making false or misleading statements in cancellation warning messages to more than two million Australian customers.

The Australian Competition and Consumer Commission (ACCC) instituted proceedings against Uber BV - a subsidiary that manages the multinational's website and app here - in the Federal Court today, with the rideshare company admitting to breaching Australian Consumer Law in joint submissions with the competition watchdog.

The ACCC says between December 2017 and September 2021, the Uber rideshare app displayed a cancellation warning to consumers who sought to cancel a ride with words to the effect of: ‘You may be charged a small fee since your driver is already on their way’.

This message was shown to consumers that were seeking to cancel a ride within Uber’s free cancellation period of five minutes after the driver had accepted a trip.

“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.

The message was amended in September 2021 across Australia to ‘You won’t be charged a cancellation fee’, if users sought to cancel during the free period.

In addition the ACCC says, for about two years, the Uber app displayed an estimated fare range for the ‘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.

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.

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.

“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.”

The 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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