Uber facing $26 million fine over ‘misleading’ cancellation fee messages

The Australian Competition and Consumer Commission (ACCC) today instituted proceedings in the Federal Court against Uber, which has already admitted that it breached 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 that said: “you may be charged a small fee since your driver is already on their way”.

At the time, most Uber services had a five-minute fee-free cancellation period after the driver has accepted the trip.

More than two million Australian users were shown the misleading warning.

Uber has already agreed to make joint submissions with the ACCC to the Court for penalties totalling $26 million to be imposed.

“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 changed the warning message, if a ride was cancelled during the free cancellation period, to read: “you won’t be charged a cancellation fee”.

The proceedings also deal with allegations that Uber falsely represented the fare for the “Uber Taxi” fare option, which was offered to Sydney users from 2013 until August 2020.

The algorithm that was 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. 

“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.”

In a statement, Uber said since the ACCC raised the two matters with them, work had been done to “streamline our in-app messages to make it clear exactly when cancellation charges will or will not apply, per occasion, so that riders always have certainty”.

“The ACCC has not alleged that Uber was charging cancellation fees in circumstances where no fee should have applied,” Uber clarified.

“Over time we have constantly evolved our offering, looking for ways to create better customer experiences, trial new products and invest in our technology.  We are committed to continually raising the bar – for ourselves, our industry, and most importantly for the people who use our services. 

“As always, we will continue to listen to feedback from driver-partners and riders to make sure that the service we are offering continues to meet their needs. With more than 3.8 million Australians regularly choosing to take rides with the Uber app, we are committed to constantly innovating and investing in our technology and customer support to deliver an excellent experience for all of them.

“Uber and the ACCC will jointly seek orders from the Federal Court, including 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.”