Global rideshare giant Uber has admitted that it had engaged in misleading or deceptive conduct and that it had made false and misleading representations via its Uber app and has agreed to a $26 million fine.
In a case brought to the Federal Court by the Australian Competition and Consumer Commission, Uber admitted that it had breached Australian Consumer Law by making false or misleading statement in its cancellation warning messages, as well as its Uber Taxi fare estimates.
The company agreed to make joint submissions with the ACCC to the court for penalties totaling $26 million to be imposed.
Although both the ACCC and Uber have agreed to the $26 million penalties and will present this figure to the court as a joint submission, it remains the courts decision whether this is an adequate penalty.
For four years between at least December 2017 and September last year, the company has conceded that its Uber rideshare app would display a cancellation warning to consumers seeking 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’ – even when the cancellation had occurred within Ubers free cancellation period.
Most Uber services including UberX have a five minute ‘free cancellation period’ after the driver has accepted a job, in which the Uber user can cancel without copping a fee.
The ACCC investigation of the practice found that more than two million Australian consumers were shown the misleading message.
“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 last year, Uber changed the cancellation message to ’You won’t be charged a cancellation fee’ for customers that sought to cancel a ride during the free cancellation period.
Additionally, Uber conceded that it had falsely represented the estimated cost of a taxi ride booked through its Uber Taxi option for about two years.
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,” Ms 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,” Ms Cass-Gottlieb said.
“This is particularly important as online businesses often carefully design their user interfaces to influence consumer behaviour.”
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