Uber hit with $21m fine over misleading cancellation warning

The Australian federal court has fined Uber $21m for threatening cancellation fees it never charged and overstating fare estimates on some rides, lower than a regulator wanted but a setback for the company.

The Australian arm of the US ride-sharing app maker broke consumer law by misleading customers with warnings they would be charged for cancelling some rides from 2017 to 2021, and by using an inaccurate software algorithm to estimate fares for a taxi service it offered until August 2020, the federal court ruled.

In April this year, the Australian Competition and Consumer Commission (ACCC) lodged a case against the ride-sharing app where it admitted that it breached consumer law by making false or misleading statements in cancellation warning messages and Uber Taxi fare estimate.

The $21m fine is less than the original $26m penalty that the ACCC and Uber agreed on. Justice Michael O’Bryan called the case unusual as he handed down a lesser penalty.

Gina Cass-Gottlieb, chair at the ACCC said, “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.

“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.”

Between at least December 2017 and September 2021, the Uber rideshare app displayed a cancellation warning to consumers who sought to cancel a ride saying words to the effect of ‘You may be charged a small fee since your driver is already on their way’, even when consumers were seeking to cancel a ride within Uber’s free cancellation period.

Cass-Gottlieb said in April, “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.”

Most Uber services including the popular UberX have a five-minute ‘free cancellation period’ after the driver has accepted the trip, in which an Uber user can cancel their ride without incurring a fee.

More than two million Australian consumers were shown the misleading cancellation warning.