Regulator slams $14million fine on Uber for misleading consumers

*Gina Cass-Gottlieb, Chairman of the Australian Competition and Consumer Commission, says 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’

*Uber apologises to Australians ‘for the mistakes we made’

Gbenga Kayode | ConsumerConnect

As a regulatory measure to protect the country’s consumers against unfair market practices, the Australian Competition and Consumer Commission (ACCC) says an Australian court has fined Uber Technologies 21 million Australian Dollars ($14m) for threatening cancellation fees the company never charged, and overstating fare estimates on some rides.

ConsumerConnect learnt the penalty announced Wednesday, December 7, 2022, was below what the competition watchdog had 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 Web site 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 in a ruling declared 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, reports Al Jazeera.

The Australian Competition and Consumer Commission (ACCC), which brought the case against Uber, and the tech firm had already agreed on a fine of 26 million Australian dollars ($17.39m), but O’Bryan told the court the evidence provided by both sides was “grossly inadequate”, leaving him to speculate on the extent of 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, report said.

The Judge ruled the UberTaxi algorithm overshot the fare estimate 89 percent of the time, but less than 1 percent of total Uber rides used that service.

Commenting on the development, 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.”

Cass-Gottlieb stated the Judge further made it 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.”