Uber admits misleading Australian passengers and agrees to pay $19 million

Business

Uber apologized that estimated taxi fare was ‘higher than it should have been’

Uber apologized that estimated taxi fare was ‘higher than it should have been’

Uber agreed to pay a A$26 million (US$19 million) fine to misleading drivers by falsely warning they could be charged a cancellation fee and for overstating estimates of comparable taxi rides, the Ride Share Company and Australia’s Consumer Protection Agency announced on Tuesday.

Uber BV, a Dutch subsidiary of San Francisco-based Uber Technologies Inc., has admitted to violating Australian consumer law by providing false or misleading information on its app, the Australian Competition and Consumer Commission said in a statement .

The first violation stems from a free cancellation policy that allows a customer to cancel a booking free of charge up to five minutes after a driver has accepted the ride.

Between at least December 2017 and September 2021, more than 2 million Australian customers who attempted to cancel within that five-minute window were warned: “You may be charged a small fee as your driver is already on his way.”

The cancellation message has since changed to: “You will not be charged a cancellation fee.”

“Uber admits it misled Australian users for a number of years and may have led some of them to choose not to cancel their ride after receiving the cancellation warning,” said the commission’s chair, Gina Cass-Gottlieb.

Uber said in a statement that almost all drivers canceled their trips despite the warnings.

The second breach related to estimated taxi fares that the app provided to customers in Sydney between June 2018 and August 2020, when the taxi ride option was discontinued.

The algorithm used to calculate fare ranges inflated the taxi estimates. The actual taxi fare was almost always cheaper than Uber’s lowest estimate. Uber did not ensure the algorithm was correct, the commission said.

Uber apologized that the estimated taxi fare was “higher than it should have been.”

Uber said it worked with the commission and made changes to its platform based on investigators’ concerns.

“We’re committed to continually raising the bar — for ourselves, our industry, and most importantly, the people who use our services,” said Uber.

Uber and the Commission agreed to jointly petition the federal court to award the AU$26 million (US$19 million) fine.

The maximum fine Uber could have faced is difficult to calculate, as penalties have escalated significantly over the period in question.

The maximum fine under the Consumer Law was AU$1.1 million ($793,000) per violation.

They are now A$10 million (US$7.2 million) – triple the value of the benefit received, or 10% of annual revenue.

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