The Australian Competition and Consumer Commission (ACCC) has launched proceedings in the Federal Court against global ride sharing giant Uber over what the consumer watchdog says were ‘misleading’ and ‘deceptive’ statements in cancellation messages.
Uber has admitted it breached Australian Consumer Law through cancellation warning messages and Uber Taxi fare estimates, the commission said in a statement on Tuesday.
The US-based platform has agreed to make joint submissions with the ACCC to the Court for penalties totalling $26 million.
Between around December 2017 and September 2021, the Uber rideshare app showed warnings to consumers who sought 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’.
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This was occurring even when consumers were seeking to cancel a ride within Uber’s free cancellation period, the ACCC said.
Most Uber services, including the UberX service, 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 2 million Australian consumers were shown the misleading cancellation warning.
Newly appointed ACCC chair Gina Cass-Gottlieb said Uber has admitted 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”.
This likely occurred even though customers were entitled to cancel free of charge under Uber’s own policy, Cass-Gottlieb said.
In September 2021, Uber updated its cancellation messaging for Uber services across Australia.
The message was amended to ‘You won’t be charged a cancellation fee’, in order to accurately inform customers they would not be charged during the free cancellation window.
The ACCC also said that for about two years, the Uber app displayed an estimated fare range for the ‘Uber Taxi’ ride option which Uber admits misled users about the estimated range of the fare of a taxi booked through that option.
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 ACCC boss said Uber admits its conduct misled users about the likely cost of the taxi option.
It has also conceded it did not monitor the algorithm used to generate these estimates to ensure it was accurate.
Cass-Gottlieb said consumers should be confident that they can trust the accuracy of information provided by apps like that offered by Uber.
“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,” she 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.
“This is particularly important as online businesses often carefully design their user interfaces to influence consumer behaviour,” Cass-Gottlieb said.
The parties have 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.
In a statement published on April 26, Uber Australia said it had cooperated with the ACCC throughout its two year investigation, including “proactively making changes to our platform based on the concerns they raised”.
It said the company had worked to streamline its in-app messages to make the rules around cancellations clearer in order to ensure rider “certainty”.
“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,” Uber Australia said.
The Federal Court will decide at a later date whether the orders sought, including the proposed penalties, are appropriate.