Uber's $21 million fine in the Federal Court on Wednesday sends a message to businesses not to mess with consumer protection, a competition expert has warned.
Uber was fined over its "Uber Taxi" fare estimates and trip cancellation fees after admitting its conduct had misled or deceived consumers, breaching consumer law.
The case was lodged by the Australian Competition and Consumer Commission (ACCC) in April.
It alleged Uber's app displayed a misleading cancellation warning for at least four years and was seen by more than two million Australians.
"We took this important case because we understand that consumers rely on apps, like the Uber app, to provide accurate information to inform their purchasing decisions," ACCC Chair Gina Cass-Gottlieb said.
Rob Nicholls, associate professor in regulation and governance at the University of NSW (UNSW), said the $21 million outcome was "a big fine" which sent a strong message.
"Don't mess with consumers and consumer protection," he said.
"Don't engage in conduct that's misleading or deceptive, [and] don't make misrepresentations."
The ACCC alleged that from at least December 2017 to September 2021, Uber's app displayed a misleading cancellation warning.
Whenever consumers tried to cancel their bookings, they received a prompt saying words to the effect of: "You may be charged a small fee since your driver is already on their way."
That was despite the fact these consumers were trying to cancel their trip within Uber's free cancellation period of five minutes.
In a statement issued after the court decision, Uber said it had discontinued the Uber taxi option in 2020 and changed cancellation messaging so consumers knew when charges apply.
"We apologise to our riders for the mistakes we made, and we have since proactively made changes to our platform based on the concerns raised with us," Uber said.
Mr Nicholls said the outcome was good from a competition perspective.
"Essentially the bar for what is good practice or even standard practice in ridesharing has been lifted by Uber improving its systems," he said.
"So new entrants or other players such as DiDi, InDriver, and Ola will have to have at least as good systems as Uber in terms of consumer protection for things like cancellation fees."
Rohan Miller, senior lecturer in marketing at the school of business at the University of Sydney (USYD), was skeptical about the impact of the fine.
"I don't think it will make a lot of difference to Uber's behaviour," he said.
"Uber was great for the market for a while but now they're facing a lot more competitive engagement than they were.
"Will this lead Uber to push the barriers? Well, that's traditionally been their culture so they've got to be really careful moving forward."
The ACCC and Uber had jointly agreed to a $26 million fine against Uber, but Federal Court Justice Michael O'Bryan disagreed, saying the evidence in support of that figure was "grossly inadequate".
Justice O'Bryan found that Uber did not actually charge its customers fees if they cancelled within five minutes of the warning being issued.
Uber also admitted it misled customers of its "Uber Taxi" ride option by giving price estimates that were inaccurate and too high.
The estimates were displayed between June 2018 and August 2020 before Uber removed them from the app.
The company overestimated the "Uber Taxi" fares 89 per cent of the time, meaning customers were actually paying less and did not suffer any detriment, Justice O'Bryan found.
Ms Cass-Gottlieb said the reduced penalty was not a sign the court was reluctant to impose appropriate fines for breaches of consumer law.
"This $21 million penalty clearly signals to businesses that misleading consumers about the cost of a product or service is a serious matter which can attract substantial penalties," she said.
The court ordered Uber to introduce a compliance program, pay the ACCC’s legal fees, not to make similar communication to consumers about cancellation fees for three years and publish a corrective notice on its website.
