Uber has been fined $21 million by the Federal Court for misleading customers about their fare estimates and trip cancellation fees — a penalty lower than the company had expected.
The case was lodged by the Australian Competition and Consumer Commission (ACCC) in April, after Uber admitted its conduct had misled or deceived consumers.
Despite both parties filing joint submissions, seeking a $26 million fine against Uber, the court decided the penalty was excessive in the circumstances.
In his decision, Justice Michael O'Bryan acknowledged it was an "unusual case" where a lower penalty was more appropriate.
Essentially, both parties did not submit enough evidence to justify the higher penalty, and the ACCC failed to prove consumers had suffered significant harm.
Misleading cancellation warnings
The consumer regulator 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.
The ACCC said more than 2 million Australian consumers were shown the misleading cancellation warning.
Despite the misleading warnings, Justice O'Bryan found that Uber did not actually charge its customers fees if they cancelled within five minutes.
The judge also found that a small number of customers (0.4 per cent) were influenced by the misleading warnings — to proceed with their bookings, instead of cancelling them.
In those circumstances, the court decided that $18 million was an appropriate penalty for this misleading conduct, albeit in the "higher range".
Inaccurate fare estimates
Uber also admitted it misled customers of its "Uber Taxi" ride option (which was only available in Sydney), by giving price estimates that were inaccurate and too high.
For example, Uber's app might give customers a price estimate of $30 to $40 for its "Taxi" option. But the actual fare paid by the customer would nearly always fall below that range (say, $25).
Those misleading taxi fare estimates were displayed between June 2018 and August 2020, after which the feature was removed from the app.
Justice O'Bryan found the company had overestimated the "Uber Taxi" fares 89 per cent of the time. It meant customers were actually paying less, so they did not suffer any detriment.
Therefore, the court ordered that Uber pay $3 million for this contravention of the Australian Consumer Law — much lower than the $8 million penalty that both parties had initially sought.
