Uber Could Pay $26 Million Over ‘Misleading’ Cancellation Fee Messages

Uber Could Pay $26 Million Over ‘Misleading’ Cancellation Fee Messages
Image: MOZCO Mateusz Szymanski, Shutterstock

The ACCC has instituted proceedings in the Federal Court against Uber after the ride-sharing heavyweight admitted it engaged in misleading or deceptive conduct.

In a statement Tuesday morning, the Australian Competition and Consumer Commission (ACCC) said Uber admitted that it breached the Australian Consumer Law by making false or misleading statements in cancellation warning messages and Uber Taxi fare estimates.

The Uber app displayed a cancellation warning to riders 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.

Uber’s free cancellation period is five minutes after the driver has accepted the trip. It is as straightforward as it sounds – a user can cancel their ride without incurring a fee during this five minute period.

But according to the ACCC, more than 2 million Aussie Uber users were shown the misleading cancellation warning between December 2017 and September 2021.

As the ACCC statement explains, Uber amended its cancellation messaging in September 2021 to ‘You won’t be charged a cancellation fee’, if users seek to cancel during the free cancellation period.

In addition, the watchdog said that for about two years, the Uber app displayed an estimated fare range for the Sydney-only ‘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.

The ACCC adds: “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.”

These messages, the statement says, were displayed between June 2018 and August 2020, after which the Taxi ride option was removed.

The ACCC said Uber has agreed to make joint submissions with the ACCC to the Court for penalties totalling $26 million to be imposed. In a statement, Uber said it has cooperated with the ACCC throughout its two year investigation, including proactively making changes to its platform based on the concerns they raised.

“Since the ACCC raised this, we have worked 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,” Uber said.

“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,” ACCC chair Gina Cass-Gottlieb added. “This is particularly important as online businesses often carefully design their user interfaces to influence consumer behaviour.”

The Federal Court will decide at a later date whether the orders sought, including the proposed penalties, are appropriate.