Digital Government News

Federal Court fines Uber $21 million for overestimating service fees

Eliza Sayon Dec 8, 2022

2 min read

The Federal Court is fining rideshare giant Uber $21 million after the company admitted that it was overestimating its service fees and advertising a possible cancellation fee that it never charged.

While the fine is $5 million less than the one proposed by Uber and the ACCC, the suggested $26 million penalty was greatly exceeding any amount that was appropriate by the Federal Court.

Justice Michael O’Bryan said the evidence he had been given to back up the proposed fines was grossly inadequate.

“It left the court in the position of speculating whether any harm was suffered (by consumers) and if so, whether it was significant or trivial,” he said.

Uber admitted to misleading or deceiving customers in two instances. The first is Uber Taxi, a service offered only in Sydney where customers could arrange a rideshare service with registered taxi providers.

Uber admitted that between June 2018 and August 2020, it represented to customers that rides would fall within a displayed fare range when the actual cost was lower than the lowest estimate.

“It is important to estimate that Uber overestimated the fare at the time of booking and the consumer ultimately paid a lower fare,” the judge found.

“The fare estimate was an overestimate approximately 89 per cent of the time.”

He reduced a proposed $6 million penalty for that contravention to $3 million.

Between December 2017 and September 2021, the company also mislead customers who opted to cancel trips during a period of free cancellation by telling them that they may be charged a small cancellation fee when no fee was ever charged.

Customers using Uber X, Uber Comfort and Uber Premier received the cancellation fee notice nearly 7.4 million times over that period, while Uber Pool customers received it nearly 75,000 times.

In each case, only about 0.4 per cent of customers chose not to go ahead with cancellation.

Justice O’Byran agreed the $18 million penalty proposed for that contravention was within the range available to him.

In addition, Uber will pay $200,000 toward the ACCC’s cost of prosecuting the case and must publish corrections and implement a compliance program in respect of the Australian Consumer Law.

The company has 30 days to pay the penalties.

Uber admitted some employees were aware of both issues at the time. In a statement, the company said it had taken proactive steps based on the concerns raised in the ACCC proceedings, including discontinuing its Uber Taxi option in 2020.

ACCC chairwoman Gina Cass-Gottlieb said consumers rely on apps for accuracy because they cannot independently check or monitor the information themselves.

The penalty was a sign to digital businesses that misleading consumers were a serious matter, she said.

With AAP

Eliza Sayon

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Eliza is a content producer and editor at Public Spectrum. She is an experienced writer on topics related to the government and to the public, as well as stories that uplift and improve the community.