Uber Fined AUD 21 Million in Australia Over Misleading Advertisements About Fares, Cancellation Fees

Uber was fined AUD 21 million (roughly Rs. 115 crore) by an Australian court on Wednesday for threatening cancellation fees it never charged and overstating fare estimates on some rides. The penalty was less than a regulator wanted.

The Australian arm of the US ride-sharing app 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.

Uber said in a post on its website that it apologised to Australians "for the mistakes we made, and we have since proactively made changes to our platform based on the concerns raised with us".

Judge Michael Hugh O'Bryan said in a written ruling that by supplying inaccurate information on its smartphone app, Uber "would be expected to lead a proportion of consumers to alter their decision and not proceed with the cancellation and perhaps deter future cancellations", while distorting demand for its service.

The Australian Competition and Consumer Commission (ACCC), which brought the case against Uber, and the tech firm had already agreed on a fine of AUD 26 million (roughly Rs. 140 crore), but O'Bryan told the court the evidence provided by both sides was "grossly inadequate", leaving him to speculate on the harm to consumers.

The evidence supplied suggested less than 0.5 percent of Uber customers had gone ahead with a trip due to concern about cancellation fees. The UberTaxi algorithm overshot the fare estimate 89 percent of the time, but less than 1 percent of total Uber rides used that service, the judge said.

ACCC Chair Gina Cass-Gottlieb said in a statement that the fine "clearly signals to businesses that misleading consumers about the cost of a product or service is a serious matter which can attract substantial penalties".

The judge had made clear that the lower penalty "should not be understood as any reduction in the court's resolve to impose penalties appropriate to ... deterring contraventions of the Australian Consumer Law", Cass-Gottlieb added.

© Thomson Reuters 2022