Uber faces $26m penalty for misleading Australian users

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Uber faces $26m penalty for misleading Australian users

Federal Court to decide.

Australia's competition watchdog has kicked off a Federal Court action to formalise penalties against Uber for misleading consumers.

As the competition regulator explained its its statement, Uber has already admitted “it engaged in misleading or deceptive conduct and made false or misleading representations in the Uber ridesharing app.”

The hearing is so the commission and Uber can make joint submissions regarding the ACCC’s imposition of $26 million worth of penalties.

The parties have also 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.

Uber breached the law by making “false or misleading statements in cancellation warning messages and Uber Taxi fare estimates”, the ACCC explained.

The transgressions happened over nearly four years, between December 2017 and September 2021.

During that time, if a user tried to cancel a booking within the five minute free cancellation period, the app displayed a warning to the effect that “You may be charged a small fee since your driver is already on their way”.

That message was shown to more than two million Australian users, the ACCC said.

“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. 

The other offence subject to the Federal Court action relates to the fare range displayed by the “Uber Taxi” option.

Uber has admitted it “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 statement says.

“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.”

Cass-Gottlieb said:  “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.”

“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,” Cass-Gottlieb said.

“This is particularly important as online businesses often carefully design their user interfaces to influence consumer behaviour.” 

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