Site Search: 

Uber concedes to misleading millions of Australian consumers with its in-app claims

Share
Share on facebook
Share
Share on twitter
Twitter
Share on linkedin
LinkedIn

On 26 April 2022, the Australian Competition and Consumer Commission (the ACCC) instituted proceedings in the Federal Court against Uber. The ridesharing giant admitted that it engaged in deceptive or misleading conduct, and made false or misleading representations to consumers within its app. Uber could face a $26 million fine for breaches of the Australian Consumer Law (ACL).

First breach: Uber trip cancellation warnings

Between December 2017 and September 2021, the Uber rideshare app showed consumers a warning about when they would be charged a fee for cancelling an Uber ride. The warning read, ‘you may be charged a small fee since your driver is already on their way.’

What consumers were not being told was that for most Uber services, Uber has a free cancellation period of five minutes after a driver has accepted a trip, within which users can cancel their ride without incurring a fee.

The ACCC found that more than two million consumers in Australia were shown this misleading message. Uber even admitted that its conduct may have influenced some of these users to decide not to cancel their ride after receiving the warning.

It was only in September 2021 that Uber updated its cancellation warning to accurately inform consumers, ‘you won’t be charged a cancellation fee,’ if they wanted to cancel their ride during the free cancellation period.

Second breach: Uber Taxi cost estimates

Uber also falsely represented the fare for Uber Taxi rides, an option allowing users to book a regular taxi through the Uber app.

Uber’s algorithm inflated the cost so that in most cases, the actual fare for a taxi was cheaper than the lowest estimate shown to consumers. Uber admitted that it failed to monitor the algorithm generating these estimates and to ensure that it was accurate.

While users may have been pleasantly surprised when they were charged less for a taxi than they had expected, Uber’s conduct was misleading because there is an expectation that consumers can rely on accurate information to help them make informed decisions about their options.

It is true that Uber Taxi trips made up a small portion of the trips on the platform as it was only ever available in Sydney. However, these misleading fares were shown to consumers for a substantial period of two years, after which the Uber Taxi option was canned in August 2020.

What now?

Uber admitted it contravened the ACL and agreed to make joint submissions with the ACCC to the Federal Court, including for Uber to pay $26 million in penalties.

However, whether the penalties and orders sought are appropriate will ultimately be for the Court to determine at a later date and may end up being different to what Uber and the ACCC are putting on the table.

Key takeaways

Uber is but one example of a ‘gig economy’ at work and this case is a warning to big tech platform companies to ensure that all the information they provide to consumers is accurate and honest.

Misleading and false representations not only lead to distrust in businesses, but also to substantial penalties from Australia’s consumer watchdog.

 

McCabes will write a further article once the Federal Court makes its decision.

Contributors

Shayna Correa​​
Paralegal

Site Search: